Document ID: chunk:federal_register_of_legislation:F2017C00907:reg:15:p10
Version: federal_register_of_legislation:F2017C00907
Segment Type: reg
Provision Reference: reg 15 (pt 10/12)
Character Range: 35140–38325

an "Operating and Financial Review") that may reasonably be expected to influence the economic decisions of the users of the financial report. ASA 720[15] deals with the auditor's responsibilities relating to other information.

    These circumstances are only examples; not all are likely to be present in all audits nor is the list necessarily complete.  The existence of any circumstances such as these does not necessarily lead to a conclusion that the misstatement is material.

A22.         ASA 240[16] 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.[17]

A23.         The cumulative effect of immaterial uncorrected misstatements related to prior periods may have a material effect on the current period's financial report.  There are different acceptable approaches to the auditor's evaluation of such uncorrected misstatements on the current period's financial report.  Using the same evaluation approach provides consistency from period to period.

Considerations Specific to Public Sector Entities (Ref: Para 11(a))

A24.         In the case of an audit of a public sector entity, the evaluation whether a misstatement is material may also be affected by the auditor's responsibilities established by law, regulation or other authority to report specific matters, including, for example, fraud.

A25.         Furthermore, issues such as public interest, accountability, probity and ensuring effective legislative oversight, in particular, may affect the assessment whether an item is material by virtue of its nature.  This is particularly so for items that relate to compliance with law, regulation, or other authority.

Communication with Those Charged with Governance (Ref: Para. 12)

A26.         If uncorrected misstatements have been communicated with person(s) with management responsibilities, and those person(s) also have governance responsibilities, they need not be communicated again with those same person(s) in their governance role.  The auditor nonetheless has to be satisfied that communication with person(s) with management responsibilities adequately informs all of those with whom the auditor would otherwise communicate in their governance capacity.[18]

A27.         Where there is a large number of individual immaterial uncorrected misstatements, the auditor may communicate the number and overall monetary effect of the uncorrected misstatements, rather than the details of each