Document ID: chunk:federal_register_of_legislation:F2023C01136:reg:9:p20
Version: federal_register_of_legislation:F2023C01136
Segment Type: reg
Provision Reference: reg 9 (pt 20/24)
Character Range: 58588–61636

an appropriate authority into an actual, or suspected, illegal act (e.g., matters that are or appear to be related to money laundering).

A53.         As indicated by paragraph 14(b), it will be extremely rare for a matter determined to be a key audit matter not to be communicated in the auditor's report.  This is because there is presumed to be a public interest benefit in providing greater transparency about the audit for intended users.  Accordingly, the judgement not to communicate a key audit matter is appropriate only in cases when the adverse consequences to the entity or the public as a result of such communication are viewed as so significant that they would reasonably be expected to outweigh the public interest benefits of communicating about the matter.

A54.         The determination not to communicate a key audit matter takes into account the facts and circumstances related to the matter.  Communication with management and those charged with governance helps the auditor understand management's views about the significance of the adverse consequences that may arise as a result of communicating about a matter.  In particular, communication with management and those charged with governance helps to inform the auditor's judgement in determining whether to communicate the matter by:

           * Assisting the auditor in understanding why the matter has not been publicly disclosed by the entity (e.g., if law, regulation or certain financial reporting frameworks permit delayed disclosure or nondisclosure of the matter) and management's views as to the adverse consequences, if any, of disclosure.  Management may draw attention to certain aspects in law or regulation or other authoritative sources that may be relevant to the consideration of adverse consequences (e.g., such aspects may include harm to the entity's commercial negotiations or competitive position).  However, management's views about the adverse consequences alone do not alleviate the need for the auditor to determine whether the adverse consequences would reasonably be expected to outweigh the public interest benefits of communication in accordance with paragraph 14(b).

           * Highlighting whether there have been any communications with applicable regulatory, enforcement or supervisory authorities in relation to the matter, in particular whether such discussions would appear to support management's assertion as to why public disclosure about the matter is not appropriate.

           * Enabling the auditor, where appropriate, to encourage management and those charged with governance to make public disclosure of relevant information about the matter.  In particular, this may be possible if the concerns of management and those charged with governance about communicating are limited to specific aspects relating to the matter, such that certain information about the matter may be less sensitive and could be communicated.

    The auditor also may consider it necessary to obtain a written representation from management as