Document ID: chunk:federal_register_of_legislation:F2025L00107:front:0:p173
Version: federal_register_of_legislation:F2025L00107
Segment Type: other
Provision Reference: 
Character Range: 538087–541592

appropriately, it may be an indication of misstatement due to fraud.

 2.       Misstatements due to fraud may result from intentional:

         1.                 Manipulation, falsification, or alteration of information or supporting documentation from which the sustainability information is prepared; or

         2.                 Misrepresentation in, or omission from, the sustainability information.
 1.       Examples of misstatements due to fraud in sustainability information:

          * Misstating sustainability information to avoid penalties or fines.

          * Intentionally inaccurate or misleading public statements or claims that will favourably impact share price or an assessment of the entity's sustainability credentials, such as an inaccurate statement that a bond is a sustainability bond.

          * Intentionally reporting sustainability information relating to performance or compensation incentives in a biased way to influence the outcome of the performance reward or compensation.

          * Emphasising that a product was produced using recycled materials but intentionally not reporting that the product was produced using forced labour.

          * Intentionally reporting topics for which the entity has positive impacts and omitting topics for which the entity has negative impacts.

          * Misstating baseline information to make sustainability information look more favourable in subsequent periods.

          * Misstating sustainability information associated with specific project milestones, budget approval, or rights to access certain markets or begin projects in certain markets or geographies.

 1.       If the practitioner identifies a misstatement that is indicative of fraud, this may have implications in relation to other aspects of the assurance engagement, particularly:

         1.                 The practitioner's identification and assessment of risks of material misstatements due to fraud at the disclosures level (in a limited assurance engagement), or at the assertion level for disclosures (in a reasonable assurance engagement), and the resulting effect on the nature, timing and extent of further procedures; and

         2.                 The reliability of management representations, recognising that an instance of fraud is unlikely to be an isolated occurrence.

Consideration of Identified Misstatements as the Engagement Progresses (Ref: Para. 155)

 1.       The practitioner may also consider whether accumulated misstatements relate to control deficiencies. Specifically, the practitioner may consider whether the nature or extent of the accumulated misstatements result in the need to update the practitioner's understanding of the entity's system of internal control relevant to the preparation of the sustainability information (see paragraphs 113L and 113R).

Communicating and Correcting Misstatements (Ref: Para. 156–158)

 1.       In the case of narrative disclosures, asking management to correct a misstatement may involve management either re-wording or removing the misstated text.

 2.       The practitioner's understanding of management's reasons for not making the corrections may indicate possible bias in management's judgements.

Evaluating the Effect of Uncorrected Misstatements (Ref: Para. 160)

 1.       Determining whether uncorrected misstatements are material involves professional judgement in the context of the applicable criteria and the engagement circumstances, including who