Document ID: chunk:federal_register_of_legislation:F2022C01208:reg:14:p19
Version: federal_register_of_legislation:F2022C01208
Segment Type: reg
Provision Reference: reg 14 (pt 19/57)
Character Range: 61618–64777

and, where applicable, communicate these matters to other auditors involved in the review. Factors considered ordinarily include the materiality of, and risk of misstatement in, the financial information of the component, and the auditor's understanding of the extent to which internal control over the preparation of such financial information is centralised or decentralised.  (Ref: Para. 13)

A13.         Obtaining an understanding of the entity and its environment enables the auditor to focus the enquiries made, and the analytical and other review procedures applied in performing a review of the financial report in accordance with this Auditing Standard. As part of obtaining this understanding, ordinarily the auditor makes enquiries of the predecessor auditor and, where practicable, reviews the predecessor auditor's documentation for the preceding annual audit and for any prior periods in the current year that have been reviewed by the predecessor auditor. In doing so, ordinarily the auditor considers the nature of any corrected misstatements, and any uncorrected misstatements aggregated by the auditor, any significant risks, including the risk of management override of controls, and significant accounting and any reporting matters that may be of continuing significance, such as material weaknesses in internal control.  (Ref: Para. 14)

Materiality (Ref: Para. 15)

A14.         The auditor needs to use professional judgement and consider qualitative and quantitative factors in determining materiality.

A15.         Ordinarily, the auditor's consideration of materiality for a review of a financial report is based on the period financial data and accordingly, materiality based on interim period financial data may be less than materiality for annual financial data. If the entity's business is subject to cyclical variations or if the financial results for the current period show an exceptional decrease or increase compared to prior periods and expected results for the current year, the auditor may, for example, conclude that materiality is more appropriately determined using a normalised figure for the period.

A16.         The auditor's consideration of materiality, in evaluating the effects of misstatements, is a matter of professional judgement and is affected by the auditor's perception of the financial information needs of users of the financial report.

A17.         If the applicable financial reporting framework contains a definition of materiality, it will ordinarily provide a frame of reference to the auditor when determining materiality for planning and performing the review.

A18.         The auditor needs, when relevant, to consider materiality from the perspective of both the entity and the consolidated entity.

Enquiries, Analytical and Other Review Procedures

A19.         A review ordinarily does not require tests of the accounting records through inspection, observation or confirmation.  Procedures for performing a review of a financial report ordinarily are limited to making enquiries, primarily of persons responsible for financial and accounting matters and applying analytical and other