Document ID: chunk:federal_register_of_legislation:F2022L00712:body:0:p11
Version: federal_register_of_legislation:F2022L00712
Segment Type: other
Provision Reference: 
Character Range: 30039–33107

reduce aggregation risk to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements in the financial report exceeds materiality for the financial report as a whole. Similarly, performance materiality relating to a materiality level determined for a particular class of transactions, account balance or disclosure is set to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements in that particular class of transactions, account balance or disclosure exceeds the materiality level for that particular class of transactions, account balance or disclosure. The determination of performance materiality is not a simple mechanical calculation and involves the exercise of professional judgement. It is affected by the auditor's understanding of the entity, updated during the performance of the risk assessment procedures; and the nature and extent of misstatements identified in previous audits and thereby the auditor's expectations in relation to misstatements in the current period.

Amendments to ASA 402

32.               Existing paragraph A19 is amended to read as follows:

Another auditor may be used to perform procedures that will provide the necessary information about the relevant controls at the service organisation related to services provided to the user entity. If a type 1 or type 2 report has been issued, the user auditor may use the service auditor to perform these procedures as the service auditor has an existing relationship with the service organisation. The user auditor, using the work of another auditor, may find the guidance in ASA 220600[10] useful as it relates to determining the competence and capabilities of the other understanding another auditor (including that auditor's independence and professional competence), the direction and supervisioninvolvement in the work of the other another auditor, in planning the nature, timing and extent of thesuch work assigned to the other auditor, and in evaluating the sufficiency and appropriateness of the audit evidence obtained.

Amendments to ASA 501

33.               Existing paragraph A3 is amended to read as follows:

Matters relevant in planning attendance at physical inventory counting (or in designing and performing audit procedures pursuant to paragraphs 4-8 of this Auditing Standard) include, for example:

           * …

           * The locations at which inventory is held, including the materiality of the inventory and the risks of material misstatement at different locations, in deciding at which locations attendance is appropriate. ASA 600[4] deals with the involvement of other auditors and accordingly may be relevant if such involvement is with regards to attendance of physical inventory counting at a remote location.

           * …

Amendments to ASA 550

34.               Existing paragraph A13 is amended to read as follows:

In the context of a group audit, ASA 600 requires the group auditorengagement team to request component auditors to