Document ID: chunk:federal_register_of_legislation:F2017L01179:body:0:p10
Version: federal_register_of_legislation:F2017L01179
Segment Type: other
Provision Reference: 
Character Range: 26996–30151

the financial report as a whole when the amount of the misclassification is small in relation to the size of the related balance sheet line items and the misclassification does not affect the income statement or any key ratios.  Depending on the circumstances, misstatements in disclosures could also be indicative of fraud, and, for example, may arise from:

           * Misleading disclosures that have resulted from bias in management's judgements; or

           * Extensive duplicative or uninformative disclosures that are intended to obscure a proper understanding of matters in the financial report.

When considering the implications of misstatements in classes of transactions, account balances and disclosures, the auditor exercises professional scepticism in accordance with ASA 200.[8]

53.               Existing paragraph A22 is amended to read as follows:

ASA 240[9] explains how the implications of a misstatement that is, or may be, the result of fraud ought to be considered in relation to other aspects of the audit, even if the size of the misstatement is not material in relation to the financial report. Depending on the circumstances, misstatements in disclosures could also be indicative of fraud, and, for example, may arise from:

         * Misleading disclosures that have resulted from bias in management's judgements; or

         * Extensive duplicative or uninformative disclosures that are intended to obscure a proper understanding of matters in the financial report.

When considering the implications of misstatements in classes of transactions, account balances and disclosures, the auditor exercises professional scepticism in accordance with ASA 200.[10]

Amendments to ASA 500

54.               Existing paragraph 7 is amended to read as follows:

    When designing and performing audit procedures, the auditor shall consider the relevance and reliability of the information to be used as audit evidence.  (Ref: Para. A26–A3433)

55.               Existing paragraph A26 is amended to read as follows:

    As noted in paragraph A1, while audit evidence is primarily obtained from audit procedures performed during the course of the audit, it may also include information obtained from other sources such as, for example, previous audits, in certain circumstances, and a firm's quality control procedures for client acceptance and continuance and complying with certain additional responsibilities under law, regulation or relevant ethical requirements (e.g., regarding an entity's non‑compliance with laws and regulations).  The quality of all audit evidence is affected by the relevance and reliability of the information upon which it is based.

56.               A new paragraph after existing paragraph A33 is inserted as follows:

    ASA 250[11] provides further guidance with respect to the auditor complying with any additional responsibilities under law, regulation or relevant ethical requirements regarding an entity's identified or suspected non‑compliance with laws and regulations that may provide further information that is relevant to the auditor's work in accordance with Australian Auditing