Document ID: chunk:federal_register_of_legislation:F2023C01137:body:0:p11
Version: federal_register_of_legislation:F2023C01137
Segment Type: other
Provision Reference: 
Character Range: 29839–33077

applicable financial reporting framework;

(b)                The disclosures in the financial report are not presented in accordance with the applicable financial reporting framework; or

(c)                The financial report does not provide the additional disclosures necessary to achieve fair presentation beyond disclosures specifically required by the applicable financial reporting framework.

    Paragraph A14 of ASA 450 provides further examples of material misstatements in qualitative disclosures that may arise.

Nature of an Inability to Obtain Sufficient Appropriate Audit Evidence (Ref: Para. 6(b))

A8.             The auditor's inability to obtain sufficient appropriate audit evidence (also referred to as a limitation on the scope of the audit) may arise from:

(a)                Circumstances beyond the control of the entity;

(b)                Circumstances relating to the nature or timing of the auditor's work; or

(c)                Limitations imposed by management.

A9.             An inability to perform a specific procedure does not constitute a limitation on the scope of the audit if the auditor is able to obtain sufficient appropriate audit evidence by performing alternative procedures.  If this is not possible, the requirements of paragraphs 7(b) and 9–10 apply as appropriate.  Limitations imposed by management may have other implications for the audit, such as for the auditor's assessment of fraud risks and consideration of engagement continuance.

A10.         Examples of circumstances beyond the control of the entity include when:

           * The entity's accounting records have been destroyed.

           * The accounting records of a component for which further audit procedures are determined to be necessary for the purposes of the group audit have been seized indefinitely by governmental authorities.

A11.         Examples of circumstances relating to the nature or timing of the auditor's work include when:

           * The entity is required to use the equity method of accounting for an associated entity, and the auditor is unable to obtain sufficient appropriate audit evidence about the latter's financial information to evaluate whether the equity method has been appropriately applied.

           * The timing of the auditor's appointment is such that the auditor is unable to observe the counting of the physical inventories.

           * The auditor determines that performing substantive procedures alone is not sufficient, but the entity's controls are not effective.

A12.         Examples of an inability to obtain sufficient appropriate audit evidence arising from a limitation on the scope of the audit imposed by management include when:

           * Management prevents the auditor from observing the counting of the physical inventory.

           * Management prevents the auditor from requesting external confirmation of specific account balances.

         Aus A12.1 An inability to obtain sufficient appropriate audit evidence due to a management-imposed limitation may be a matter that the auditor is required to report to the Australian Securities and Investments Commission (ASIC) under sections 311, 601HG or 990K of the Corporations Act 2001