Document ID: chunk:federal_register_of_legislation:F2023C01124:reg:17:p28
Version: federal_register_of_legislation:F2023C01124
Segment Type: reg
Provision Reference: reg 17 (pt 28/41)
Character Range: 89689–92790

in certain circumstances, obtaining consent to resign from the Australian Securities and Investments Commission (ASIC).

Considerations Specific to Public Sector Entities

A58.         In many cases in the public sector, the option of withdrawing from the engagement may not be available to the auditor due to the nature of the mandate or public interest considerations.

Written Representations (Ref: Para. 40)

A59.         ASA 580[28] establishes requirements and provides guidance on obtaining appropriate representations from management and, where appropriate, those charged with governance in the audit.  In addition to acknowledging that they have fulfilled their responsibility for the preparation of the financial report, it is important that, irrespective of the size of the entity, management and, where appropriate, those charged with governance acknowledge their responsibility for internal control designed, implemented and maintained to prevent and detect fraud.

A60.         Because of the nature of fraud and the difficulties encountered by auditors in detecting material misstatements in the financial report resulting from fraud, it is important that the auditor obtain a written representation from management and, where appropriate, those charged with governance confirming that they have  disclosed to the auditor:

         (a)                The results of management's assessment of the risk that the financial report may be materially misstated as a result of fraud; and

         (b)                Their knowledge of actual, suspected or alleged fraud affecting the entity.

Communications to Management and with Those Charged With Governance (Ref: Para. 41-43)

Communication to Management (Ref: Para. 41)

A61.         In some jurisdictions, law or regulation may restrict the auditor's communication of certain matters with management and those charged with governance. Law or regulation may specifically prohibit a communication, or other action, that might prejudice an investigation by an appropriate authority into an actual, or suspected, illegal act, including alerting the entity, for example, when the auditor is required to report the fraud to an appropriate authority pursuant to anti‑money laundering legislation. In these circumstances, the issues considered by the auditor may be complex and the auditor may consider it appropriate to obtain legal advice.

A62.         When the auditor has obtained evidence that fraud exists or may exist, it is important that the matter be brought to the attention of the appropriate level of management as soon as practicable.  This is so even if the matter might be considered inconsequential (for example, a minor defalcation by an employee at a low level in the entity's organisation).  The determination of which level of management is the appropriate one is a matter of professional judgement and is affected by such factors as the likelihood of collusion and the nature and magnitude of the suspected fraud.  Ordinarily, the appropriate level of management is at least one level above the persons who appear to be