Document ID: chunk:federal_register_of_legislation:F2022C01186:reg:14:p16
Version: federal_register_of_legislation:F2022C01186
Segment Type: reg
Provision Reference: reg 14 (pt 16/30)
Character Range: 57722–60874

audit.  This is because interpretation of relevant ethical requirements and the Australian Auditing Standards and the informed decisions required throughout the audit cannot be made without the application of relevant knowledge and experience to the facts and circumstances.  Professional judgement is necessary in particular regarding decisions about:

           * Materiality and audit risk.

           * The nature, timing, and extent of audit procedures used to meet the requirements of the Australian Auditing Standards and gather audit evidence.

           * Evaluating whether sufficient appropriate audit evidence has been obtained, and whether more needs to be done to achieve the objectives of the Australian Auditing Standards and thereby, the overall objectives of the auditor.

           * The evaluation of management's judgements in applying the entity's applicable financial reporting framework.

           * The drawing of conclusions based on the audit evidence obtained, for example, assessing the reasonableness of the estimates made by management in preparing the financial report.

A27.         The distinguishing feature of the professional judgement expected of an auditor is that it is exercised by an auditor whose training, knowledge and experience have assisted in developing the necessary competencies to achieve reasonable judgements.

A28.         The exercise of professional judgement in any particular case is based on the facts and circumstances that are known by the auditor.  Consultation on difficult or contentious matters during the course of the audit, both within the engagement team and between the engagement team and others at the appropriate level within or outside the firm, such as that required by ASA 220,[16] assist the auditor in making informed and reasonable judgements.

A29.         Professional judgement can be evaluated based on whether the judgement reached reflects a competent application of auditing and accounting principles and is appropriate in the light of, and consistent with, the facts and circumstances that were known to the auditor up to the date of the auditor's report.

A30.         Professional judgement needs to be exercised throughout the audit.  It also needs to be appropriately documented.  In this regard, the auditor is required to prepare audit documentation sufficient to enable an experienced auditor, having no previous connection with the audit, to understand the significant professional judgements made in reaching conclusions on significant matters arising during the audit.[17]  Professional judgement is not to be used as the justification for decisions that are not otherwise supported by the facts and circumstances of the engagement or sufficient appropriate audit evidence.

Sufficient Appropriate Audit Evidence and Audit Risk (Ref: Para. 5 and 17)

Sufficiency and Appropriateness of Audit Evidence

A31.         Audit evidence is necessary to support the auditor's opinion and report.  It is cumulative in nature and is primarily obtained from audit procedures performed during the course of the audit.  It may, however, also include information