Document ID: chunk:federal_register_of_legislation:F2023C01120:reg:3:p7
Version: federal_register_of_legislation:F2023C01120
Segment Type: reg
Provision Reference: reg 3 (pt 7/12)
Character Range: 28523–31677

that cause the auditor significant difficulty in applying necessary audit procedures.

           * Findings that could result in a modification to the audit opinion or the inclusion of an Emphasis of Matter paragraph in the auditor's report.

A9.             An important factor in determining the form, content and extent of audit documentation of significant matters is the extent of professional judgement exercised in performing the work and evaluating the results.  Documentation of the professional judgements made, where significant, serves to explain the auditor's conclusions and to reinforce the quality of the judgement.  Such matters are of particular interest to those responsible for reviewing audit documentation, including those carrying out subsequent audits when reviewing matters of continuing significance (for example, when performing a retrospective review of accounting estimates).

A10.         Some examples of circumstances in which, in accordance with paragraph 8, it is appropriate to prepare audit documentation relating to the use of professional judgement include, where the matters and judgements are significant:

           * The rationale for the auditor's conclusion when a requirement provides that the auditor 'shall consider' certain information or factors, and that consideration is significant in the context of the particular engagement.

           * The basis for the auditor's conclusion on the reasonableness of areas of subjective judgements made by management.

           * The basis for the auditor's evaluation of whether an accounting estimate and related disclosures are reasonable in the context of the applicable financial reporting framework, or are misstated.

           * The basis for the auditor's conclusions about the authenticity of a document when further investigation (such as making appropriate use of an expert or of confirmation procedures) is undertaken in response to conditions identified during the audit that caused the auditor to believe that the document may not be authentic.

           * When ASA 701 applies,[7] the auditor's determination of the key audit matters or the determination that there are no key audit matters to be communicated.

A11.         The auditor may consider it helpful to prepare and retain as part of the audit documentation a summary (sometimes known as a completion memorandum) that describes the significant matters identified during the audit and how they were addressed, or that includes cross‑references to other relevant supporting audit documentation that provides such information.  Such a summary may facilitate effective and efficient reviews and inspections of the audit documentation, particularly for large and complex audits.  Further, the preparation of such a summary may assist the auditor's consideration of the significant matters.  It may also help the auditor to consider whether, in light of the audit procedures performed and conclusions reached, there is any individual relevant Auditing Standard objective that the auditor cannot achieve that would prevent the auditor from achieving the overall objectives of the auditor.