Document ID: chunk:federal_register_of_legislation:F2022C01186:reg:14:p8
Version: federal_register_of_legislation:F2022C01186
Segment Type: reg
Provision Reference: reg 14 (pt 8/30)
Character Range: 33905–37159

report that gives a true and fair view in accordance with the financial reporting framework."

         The "premise, relating to the responsibilities of management and, where appropriate, those charged with governance, on which an audit is conducted" may also be referred to as the "premise."

(k)                Professional judgement means the application of relevant training, knowledge and experience, within the context provided by auditing, accounting and ethical standards, in making informed decisions about the courses of action that are appropriate in the circumstances of the audit engagement.

(l)                 Professional scepticism means an attitude that includes a questioning mind, being alert to conditions which may indicate possible misstatement due to error or fraud, and a critical assessment of audit evidence.

(m)             Reasonable assurance means, in the context of an audit of a financial report, a high, but not absolute, level of assurance.

(n)                Risk of material misstatement means the risk that the financial report is materially misstated prior to audit.  This consists of two components, described as follows at the assertion level: (Ref: Para. A3)

(i)                 Inherent risk means the susceptibility of an assertion about a class of transaction, account balance or disclosure to a misstatement that could be material, either individually or when aggregated with other misstatements, before consideration of any related controls.

(ii)               Control risk means the risk that a misstatement that could occur in an assertion about a class of transactions, account balance or disclosure and that could be material, either individually or when aggregated with other misstatements, will not be prevented, or detected and corrected, on a timely basis by the entity's controls.

(o)                Those charged with governance means the person(s) or organisation(s) (for example, a corporate trustee) with responsibility for overseeing the strategic direction of the entity and obligations related to the accountability of the entity.  This includes overseeing the financial reporting process.  For some entities in some jurisdictions, those charged with governance may include management personnel, for example, executive members of a governance board of a private or public sector entity, or an
owner‑manager.

Requirements

Ethical Requirements Relating to an Audit of a Financial Report

14.               The auditor shall comply with relevant ethical requirements, including those related to independence, relating to a financial report audit engagement.  (Ref: Para. A17‑A20)

Professional Scepticism

15.               The auditor shall plan and perform an audit with professional scepticism recognising that circumstances may exist that cause the financial report to be materially misstated.  (Ref: Para. A21‑A25)

Professional Judgement

16.               The auditor shall exercise professional judgement in planning and performing an audit of a financial report.  (Ref: Para. A26‑A30)

Sufficient Appropriate Audit Evidence and Audit Risk

17.               To obtain reasonable assurance, the auditor shall obtain sufficient appropriate audit evidence to reduce audit risk to