Document ID: chunk:federal_register_of_legislation:F2023C01138:reg:4:p16
Version: federal_register_of_legislation:F2023C01138
Segment Type: reg
Provision Reference: reg 4 (pt 16/43)
Character Range: 49335–52428

(Ref: Para. 16)

A39.         The auditor's discussion with management about a material inconsistency (or other information that appears to be materially misstated) may include requesting management to provide support for the basis of management's statements in the other information.  Based on management's further information or explanations, the auditor may be satisfied that the other information is not materially misstated.  For example, management explanations may indicate reasonable and sufficient grounds for valid differences of judgement.

A40.         Conversely, the discussion with management may provide further information that supports the auditor's conclusion that a material misstatement of the other information exists.

A41.         It may be more difficult for the auditor to challenge management on matters of judgement than on those of a more factual nature.  However, there may be circumstances where the auditor concludes that the other information contains a statement that is not consistent with the financial report or the auditor's knowledge obtained in the audit.  These circumstances may raise doubt about the other information, the financial report, or the auditor's knowledge obtained in the audit.

A42.         As there is a wide range of possible material misstatements of the other information, the nature and extent of other procedures the auditor may perform to conclude whether a material misstatement of the other information exists are matters of the auditor's professional judgement in the circumstances.

A43.         When a matter is unrelated to the financial report or the auditor's knowledge obtained in the audit, the auditor may not be able to fully assess management's responses to the auditor's enquiries.  Nevertheless, based on management's further information or explanations, or following changes made by management to the other information, the auditor may be satisfied that a material inconsistency no longer appears to exist or that the other information no longer appears to be materially misstated.  When the auditor is unable to conclude that a material inconsistency no longer appears to exist or that the other information no longer appears to be materially misstated, the auditor may request management to consult with a qualified third party (for example, a management's expert or legal counsel).  In certain cases, after considering the responses from management's consultation, the auditor may not be able to conclude whether or not a material misstatement of the other information exists.  Actions the auditor may then take include one or more of the following:

           * Obtaining advice from the auditor's legal counsel;

           * Considering the implications for the auditor's report for example, whether to describe the circumstances when there is a limitation imposed by management; or

           * Withdrawing from the audit, where withdrawal is possible under applicable law or regulation.

Responding When the Auditor Concludes That a Material Misstatement of the Other Information Exists

Responding When