Document ID: chunk:federal_register_of_legislation:F2023C01122:body:0:p8
Version: federal_register_of_legislation:F2023C01122
Segment Type: other
Provision Reference: 
Character Range: 21380–24549

ASA 505[8] establishes requirements and provides guidance for performing external confirmation procedures.

Other Audit Procedures (Ref: Para. 8(b))

A16.         Depending on the circumstances, for example where information is obtained that raises doubt about the integrity and objectivity of the third party, the auditor may consider it appropriate to perform other audit procedures instead of, or in addition to, confirmation with the third party.  Examples of other audit procedures include:

           * Attending, or arranging for another auditor to attend, the third party's physical counting of inventory, if practicable.

           * Obtaining another auditor's report, or a service auditor's report, on the adequacy of the third party's internal control for ensuring that inventory is properly counted and adequately safeguarded.

           * Inspecting documentation regarding inventory held by third parties, for example, warehouse receipts.

           * Requesting confirmation from other parties when inventory has been pledged as collateral.

Litigation and Claims

         A17.-A25.  [Deleted by the AUASB.  Refer ASA 502 Audit Evidence—Specific Considerations for Litigation and Claims]

Segment Information (Ref: Para. 13)

    A26. Depending on the applicable financial reporting framework, the entity may be required or permitted to disclose segment information in the financial report.  The auditor's responsibility regarding the presentation and disclosure of segment information is in relation to the financial report taken as a whole.  Accordingly, the auditor is not required to perform audit procedures that would be necessary to express an opinion on the segment information presented on a
    stand-alone basis.

Understanding of the Methods Used by Management (Ref: Para. 13(a))

     A27. Depending on the circumstances, example of matters that may be relevant when obtaining an understanding of the methods used by management in determining segment information and whether such methods are likely to result in disclosure in accordance with the applicable financial reporting framework include:

           * Sales, transfers and charges between segments, and elimination of inter-segment amounts.

           * Comparisons with budgets and other expected results, for example, operating profits as a percentage of sales.

           * The allocation of assets and costs among segments.

           * Consistency with prior periods, and the adequacy of the disclosures with respect to inconsistencies.

[*]  Early adoption, in conjunction with ASA 315 Identifying and Assessing Risks of Material Misstatement, permitted.
  [1]  See ASA 330 The Auditor's Responses to Assessed Risks.
  [2]  See ASA 500 Audit Evidence.
  [3]  See ASA 705 Modifications to the Opinion in the Independent Auditor's Report.
  [4]  See ASA 620 Using the Work of an Auditor's Expert.
  [5]  See ASA 330, paragraphs 22-23.
  [6]  See ASA 200 Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with Australian Auditing Standards, paragraph A48.
  [7]  See ASA 705, paragraph 13.
  [8]  See ASA 505 External Confirmations.