Document ID: chunk:federal_register_of_legislation:F2025L00107:front:0:p34
Version: federal_register_of_legislation:F2025L00107
Segment Type: other
Provision Reference: 
Character Range: 112508–116453

shall treat risks of management override of controls as risks of material misstatement due to fraud and thus risks of material misstatement at the upper end of the spectrum of risk. (Ref: Para. A418R)

Evaluating the Evidence Obtained from the Risk Assessment Procedures

 1.            The practitioner shall determine whether the evidence obtained from the risk assessment procedures provides an appropriate basis for the identification and assessment of the risks of material misstatement. If not, the practitioner shall perform additional risk assessment procedures until evidence has been obtained to provide such a basis. (Ref: Para. A419)

Documentation

 1.            The practitioner shall include in the engagement documentation:

         1.                 The engagement team discussion in accordance with paragraph 105, and the significant decisions reached;

         2.                 Key elements of the practitioner's understanding, enquiries and discussion in accordance with paragraphs 106–119R;

         3.                 The evaluation of the design of identified controls, and determination of whether such controls have been implemented, in accordance with paragraph 120L, if applicable, and paragraph 120R; and

         4.                 The identified and assessed risks of material misstatement, in accordance with paragraphs 122L and 122R.

Responding to Risks of Material Misstatement

Designing and Performing Further Procedures

Limited Assurance                                                                                                                                                                                                                                                Reasonable Assurance
    126L. The practitioner shall design and perform further procedures whose nature, timing and extent are responsive to the assessed risks of material misstatement, whether due to fraud or error, at the disclosure level. (Ref: Para. A284–A287, A420–A424)      126R. The practitioner shall design and perform further procedures whose nature, timing and extent are responsive to the assessed risks of material misstatement, whether due to fraud or error, at the assertion level for the disclosures. (Ref: Para. A284–A287, A420–A424)

 1.            In designing and performing further procedures, the practitioner shall: (Ref: Para. A424–A427)

         1.                 Consider the reasons for the assessment given to the risks of material misstatement;

         2.                 Consider whether the practitioner intends to obtain evidence about the operating effectiveness of controls in determining the nature, timing and extent of other procedures; and

         3.                 Obtain more persuasive evidence the higher the practitioner's assessment of risk.

Overall Responses

Limited Assurance                                                                                                                                                             Reasonable Assurance
    128L. The practitioner shall design and implement overall responses to address the risks of material misstatement if the practitioner identifies: (Ref: Para. A428–A429)      128R. The practitioner shall design and implement overall responses to address the risks of material misstatement if: (Ref: Para. A428–A429)

       1.       Control deficiencies in the control environment that undermine the other components of the system of internal control;                                               1.       The practitioner's evaluation of the control environment indicates that:

       2.       Fraud or suspected fraud or non-compliance or suspected non-compliance with laws and regulations; or                                                                        1.        Management, with the oversight of those charged with governance, has not created and maintained a culture of honesty and ethical