Document ID: chunk:federal_register_of_legislation:F2023C00337:reg:1:p22
Version: federal_register_of_legislation:F2023C00337
Segment Type: reg
Provision Reference: reg 1 (pt 22/23)
Character Range: 68338–71570

(c)                Reliability, in that the information provided in the financial report:

            (i)            Where applicable, reflects the economic substance of events and transactions and not merely their legal form; and

            (ii)          Results in reasonably consistent evaluation, measurement, presentation and disclosure, when used in similar circumstances.

(d)                Neutrality, in that it contributes to information in the financial report that is free from bias.

(e)                Understandability, in that the information in the financial report is clear and comprehensive and not subject to significantly different interpretation.

4.                   The auditor may decide to compare the accounting conventions to the requirements of an existing financial reporting framework considered to be acceptable.  For example, the auditor may compare the accounting conventions to IFRSs.  For an audit of a small entity, the auditor may decide to compare the accounting conventions to a financial reporting framework specifically developed for such entities by an authorised or recognised standards setting organisation.  When the auditor makes such a comparison and differences are identified, the decision as to whether the accounting conventions adopted in the preparation of the financial report constitute an acceptable financial reporting framework includes considering the reasons for the differences and whether application of the accounting conventions, or the description of the financial reporting framework in the financial report, could result in a financial report that is misleading.

5.                   A conglomeration of accounting conventions devised to suit individual preferences is not an acceptable financial reporting framework for a general purpose financial report.  Similarly, a compliance framework will not be an acceptable financial reporting framework, unless it is generally accepted in the particular jurisdictions by preparers and users.

[*]  Early adoption, in conjunction with ASA 315 Identifying and Assessing the Risks of Material Misstatement, permitted.
[1] See ASA 220 Quality Management for an Audit of a Financial Report and Other Historical Financial Information.
[2] See ASA 200 Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with Australian Auditing Standards, paragraph 13.
[3]  See ASA 705 Modifications to the Opinion in the Independent Auditor's Report.
[4]  See ASA 706 Emphasis of Matter Paragraphs and Other Matter Paragraphs in the Independent Auditor's Report.
[5]  See ASA 706.
[6]  See also ASA 700 Forming an Opinion and Reporting on a Financial Report, paragraph 43.
[7]  See ASQM 1 Quality Management for Firms that Perform Audits or Reviews of Financial Reports and Other Financial Information, or Other Assurance or Related Services Engagements, paragraph 30.
[8]  See ASA 220, paragraphs 16-21.
[9]  See Framework for Assurance Engagements.
[10]  See ASA 800 Special Considerations—Audits of Financial Reports Prepared in Accordance with Special Purpose Frameworks, paragraph 8.
   The Australian Accounting Standards Board (AASB) sets accounting standards in Australia.
[11]  See ASA