Document ID: chunk:federal_register_of_legislation:F2022C01208:reg:14:p22
Version: federal_register_of_legislation:F2022C01208
Segment Type: reg
Provision Reference: reg 14 (pt 22/57)
Character Range: 70455–73506

the board of directors in connection with the review of the financial report may also be used for the annual audit.  The auditor may decide also to perform, at the time of the review, auditing procedures that would need to be performed for the purpose of the audit of the annual financial report, for example, performing auditing procedures on:

         (a)                significant or unusual transactions that occurred during the period, such as business combinations, restructurings, or significant revenue transactions; or

         (b)                opening balances (when applicable).  (Ref: Para. 16)

A23.         A review of a financial report ordinarily does not require corroborating the enquiries about litigation or claims.  It is, therefore, ordinarily not necessary to send an enquiry letter to the entity's lawyer.  Direct communication with the entity's lawyer with respect to litigation or claims, or alternative procedures, may, however, be appropriate if a matter comes to the auditor's attention that causes the auditor to question whether the financial report is in accordance with the applicable financial reporting framework.  (Ref: Para. 16)

A24.         The auditor may obtain evidence that the financial report agrees or reconciles with the underlying accounting records by tracing the financial report to:

         (a)                the accounting records, such as the general ledger, or a consolidating schedule that agrees or reconciles with the accounting records; and

         (b)                other supporting data in the entity's records as necessary.  (Ref: Para. 17)

A25.         The auditor need not perform procedures to identify events occurring after the date of the auditor's review report.  (Ref: Para. 18)

A26.         Events or conditions which may cast significant doubt on the entity's ability to continue as a going concern may have existed at the date of the annual financial report, or may be identified as a result of enquiries of management or in the course of performing other review procedures.  When such events or conditions come to the auditor's attention, the auditor needs to enquire of those charged with governance as to their plans for future action, such as their plans to liquidate assets, borrow money or restructure debt, reduce or delay expenditures, or increase capital.  The auditor needs to enquire also as to the feasibility of the plans of those charged with governance and whether they believe that the outcome of these plans will improve the situation.  Ordinarily, the auditor considers, based on procedures performed, whether it is necessary to corroborate the feasibility of the plans of those charged with governance and whether the outcome of these plans will improve the situation.  (Ref: Para. 19)

A27.         For example, if the auditor's review procedures lead the auditor to question whether a significant sales transaction is recorded in accordance with the applicable financial reporting framework, the auditor performs additional procedures sufficient