Document ID: chunk:federal_register_of_legislation:F2025L00107:front:0:p157
Version: federal_register_of_legislation:F2025L00107
Segment Type: other
Provision Reference: 
Character Range: 490518–493925

negative aspects (presentation, classification and understandability assertion).

Management Override of Controls (Risk Assessment) (Ref: Para. 123R)

A418R. Management is in a unique position to perpetrate fraud because of management's ability to manipulate the data and records and prepare fraudulent sustainability information by overriding controls that otherwise appear to be operating effectively. Although the level of risk of management override of controls will vary from entity to entity, the risk is nevertheless present in all entities. Due to the unpredictable way in which such override could occur, it is a risk of material misstatement due to fraud and thus a risk of material misstatement at the upper end of the spectrum of risk.

Evaluating the Evidence Obtained from the Risk Assessment Procedures (Ref: Para. 124)

     1.

 2.       The practitioner's evaluation of the components of the entity's system of internal control and understanding of controls, along with any control deficiencies identified, may:

         1.                 Influence the identification and assessment of risks of material misstatement for the disclosures; and

         2.                 Indicate risks of material misstatement that may affect many disclosures, and thus may require overall responses in accordance with paragraphs 128L and 128R.

Responding to Risks of Material Misstatement

Designing and Performing Further Procedures (Ref: Para. 126L–127)

 1.       The practitioner's further procedures may include a combination of procedures such as inspection; observation; confirmation; recalculation; reperformance; analytical procedures; and enquiry. Determining the further procedures to be performed on a particular engagement is a matter of professional judgement. Because sustainability information may cover a wide range of circumstances, the nature, timing and extent of such procedures are likely to vary considerably from engagement to engagement.
 1.       Substantive procedures may include:

          * Tests of detail, for example:

                + Agreeing emissions factors to appropriate sources (for example, government publications), and considering their applicability in the circumstances.

                + Reviewing joint venture agreements and other contracts relevant to the entity's reporting boundary.

                + Reconciling recorded data to, for example, odometers on vehicles owned by the entity.

                + Reperforming calculations and reconciling differences noted.

                + Sampling and independently analysing the characteristics of materials such as coal, or observing the entity's sampling techniques and reviewing records of laboratory test results.

                + Checking the accuracy of calculations and the suitability of calculation methods used.

                + Agreeing recorded data back to source documents, such as production records, fuel usage records, and invoices for purchased energy.

          * Analytical procedures when there is a relationship between the sustainability information and other relevant information such that the practitioner may be able to develop an expectation and compare that expectation with the outcome of the measurement or evaluation of the sustainability matters.

 1.       The planned nature, timing and extent of further procedures is a matter of professional judgement