Document ID: chunk:federal_register_of_legislation:F2022C01152:reg:4:p52
Version: federal_register_of_legislation:F2022C01152
Segment Type: reg
Provision Reference: reg 4 (pt 52/63)
Character Range: 161575–164965

that the financial report is materially misstated.

A144.      ASA 705 [68] provides guidance on the implications for the auditor's opinion when the auditor believes that management's disclosures in the financial report is inadequate or misleading, including, for example, with respect to estimation uncertainty.

Written Representations (Ref: Para. 37)

A145.      Written representations about specific accounting estimates may include representations:

           * That the significant judgements made in making the accounting estimates have taken into account all relevant information of which management is aware.

           * About the consistency and appropriateness in the selection or application of the methods, assumptions and data used by management in making the accounting estimates.

           * That the assumptions appropriately reflect management's intent and ability to carry out specific courses of action on behalf of the entity, when relevant to the accounting estimates and disclosures.

           * That disclosures related to accounting estimates, including disclosures describing estimation uncertainty, are complete and are reasonable in the context of the applicable financial reporting framework.

           * That appropriate specialised skills or expertise has been applied in making the accounting estimates.

           * That no subsequent event requires adjustment to the accounting estimates and related disclosures included in the financial report.

           * When accounting estimates are not recognised or disclosed in the financial report, about the appropriateness of management's decision that the recognition or disclosure criteria of the applicable financial reporting framework have not been met.

Communication with Those Charged With Governance, Management or Other Relevant Parties (Ref: Para. 38)

A146.      In applying ASA 260, the auditor communicates with those charged with governance the auditor's views about significant qualitative aspects of the entity's accounting practices relating to accounting estimates and related disclosures.[69] Appendix 2 includes matters specific to accounting estimates that the auditor may consider communicating to those charged with governance.

A147.      ASA 265 requires the auditor to communicate in writing to those charged with governance significant deficiencies in internal control identified during the audit.[70] Such significant deficiencies may include those related to controls over:

(a)                The selection and application of significant accounting policies, and the selection and application of methods, assumptions and data;

(b)                Risk management and related systems;

(c)                Data integrity, including when data is obtained from an external information source; and

(d)                The use, development and validation of models, including models obtained from an external provider, and any adjustments that may be required.

A148.      In addition to communicating with those charged with governance, the auditor may be permitted or required to communicate directly with regulators or prudential supervisors. Such communication may be useful throughout the audit or at particular stages, such as when planning the audit or when finalising the auditor's report. For example, in some jurisdictions, financial institution regulators seek to