Document ID: chunk:federal_register_of_legislation:F2023C01124:reg:17:p11
Version: federal_register_of_legislation:F2023C01124
Segment Type: reg
Provision Reference: reg 17 (pt 11/41)
Character Range: 41027–44334

discuss with them the nature, timing and extent of audit procedures necessary to complete the audit. Such communications with those charged with governance are required unless the communication is prohibited by law or regulation.  (Ref: Para. A61, A63-A65)

43.               The auditor shall communicate, unless prohibited by law or regulation, with those charged with governance any other matters related to fraud that are, in the auditor's judgement, relevant to their responsibilities.  (Ref: Para. A66)

Reporting Fraud to an Appropriate Authority Outside the Entity

44.               If the auditor has identified or suspects a fraud, the auditor shall determine whether law, regulation or relevant ethical requirements:  (Ref: Para. A67‑A68)

         (a)                Require the auditor to report to an appropriate authority outside the entity.

         (b)                Establish responsibilities under which reporting to an appropriate authority outside the entity may be appropriate in the circumstances.

Documentation

45.               The auditor shall include the following in the audit documentation[12] of the identification and the assessment of the risks of material misstatement required by ASA 315:[13]

         (a)                The significant decisions reached during the discussion among the engagement team regarding the susceptibility of the entity's financial report to material misstatement due to fraud;

         (b)                The identified and assessed risks of material misstatement due to fraud at the financial report level and at the assertion level; and

         (c)                Identified controls in the control activities component that address assessed risks of material misstatement due to fraud.

46.               The auditor shall include the following in the audit documentation of the auditor's responses to the assessed risks of material misstatement required by ASA 330:[14]

         (a)                The overall responses to the assessed risks of material misstatement due to fraud at the financial report level and the nature, timing and extent of audit procedures, and the linkage of those procedures with the assessed risks of material misstatement due to fraud at the assertion level; and

         (b)                The results of the audit procedures, including those designed to address the risk of management override of controls.

47.               The auditor shall include in the audit documentation communications about fraud made to management, those charged with governance, regulators and others.

48.               If the auditor has concluded that the presumption that there is a risk of material misstatement due to fraud related to revenue recognition is not applicable in the circumstances of the engagement, the auditor shall include in the audit documentation the reasons for that conclusion.

                  * * *

Application and Other Explanatory Material

Characteristics of Fraud (Ref: Para. 3)

A1.             Fraud, whether fraudulent financial reporting or misappropriation of assets, involves incentive or pressure to commit fraud, a perceived opportunity to do so and some rationalisation of the act.  For example:

           * Incentive or pressure to commit fraudulent financial reporting may