Document ID: chunk:federal_register_of_legislation:F2019L00016:reg:19:p1
Version: federal_register_of_legislation:F2019L00016
Segment Type: reg
Provision Reference: reg 19 (pt 1/2)
Character Range: 34319–37536

19    See ASA 540 Auditing Accounting Estimates and Related Disclosures

40.               The following paragraph A40 is inserted following the above insertion:

Obtaining an understanding of why management or, when applicable, a management's expert uses an external information source, and how the relevance and reliability of the information was considered (including its accuracy and completeness), may help to inform the auditor's consideration of the relevance and reliability of that information.

41.               The following paragraph A41 is inserted following the above insertions:

The following factors may be important when considering the relevance and reliability of information obtained from an external information source, including its accuracy and completeness, taking into account that some of these factors may only be relevant when the information has been used by management in preparing the financial report or has been obtained by the auditor:

           * The nature and authority of the external information source. For example, a central bank or government statistics office with a legislative mandate to provide industry information to the public is likely to be an authority for certain types of information;

           * The ability to influence the information obtained, through relationships between the entity and the information source;

           * The competence and reputation of the external information source with respect to the information, including whether, in the auditor's professional judgement, the information is routinely provided by a source with a track record of providing reliable information;

           * Past experience of the auditor with the reliability of the information provided by the external information source;

           * Evidence of general market acceptance by users of the relevance and/or reliability of information from an external information source for a similar purpose to that for which the information has been used by management or the auditor;

           * Whether the entity has in place controls to address the relevance and reliability of the information obtained and used;

           * Whether the external information source accumulates overall market information or engages directly in "setting" market transactions;

           * Whether the information is suitable for use in the manner in which it is being used and, if applicable, was developed taking into account the applicable financial reporting framework;

           * Alternative information that may contradict the information used;

           * The nature and extent of disclaimers or other restrictive language relating to the information obtained;

           * Information about the methods used in preparing the information, how the methods are being applied including, where applicable, how models have been used in such application, and the controls over the methods; and

           * When available, information relevant to considering the appropriateness of assumptions and other data applied by the external information sources in developing the information obtained.

42.               The following paragraph A42 (including footnotes, 20 and 21)