Document ID: chunk:federal_register_of_legislation:F2023C01123:reg:9:p4
Version: federal_register_of_legislation:F2023C01123
Segment Type: reg
Provision Reference: reg 9 (pt 4/9)
Character Range: 15110–18315

determine the materiality level or levels to be applied to those particular classes of transactions, account balances or disclosures. (Ref: Para. A3-A12)

11.               The auditor shall determine performance materiality for purposes of assessing the risks of material misstatement and determining the nature, timing and extent of further audit procedures. (Ref: Para. A13)

Revision as the Audit Progresses

12.               The auditor shall revise materiality for the financial report as a whole (and, if applicable, the materiality level or levels for particular classes of transactions, account balances or disclosures) in the event of becoming aware of information during the audit that would have caused the auditor to have determined a different amount (or amounts) initially. (Ref: Para. A14)

13.               If the auditor concludes that a lower materiality for the financial report as a whole (and, if applicable, materiality level or levels for particular classes of transactions, account balances or disclosures) than that initially determined is appropriate, the auditor shall determine whether it is necessary to revise performance materiality, and whether the nature, timing and extent of the further audit procedures remain appropriate.

Documentation

14.               The auditor shall include in the audit documentation the following amounts and the factors considered in their determination:[5]

(a)                Materiality for the financial report as a whole (see paragraph 10 of this Auditing Standard);

(b)                If applicable, the materiality level or levels for particular classes of transactions, account balances or disclosures (see paragraph 10 of this Auditing Standard);

(c)                Performance materiality (see paragraph 11 of this Auditing Standard); and

(d)                Any revision of (a)-(c) as the audit progressed (see paragraphs 12-13 of this Auditing Standard).

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Application and Other Explanatory Material

Materiality and Audit Risk (Ref: Para. 5)

A1.             In conducting an audit of a financial report, the overall objectives of the auditor are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, thereby enabling the auditor to express an opinion on whether the financial report is prepared, in all material respects, in accordance with an applicable financial reporting framework; and to report on the financial report, and communicate as required by the Australian Auditing Standards, in accordance with the auditor's findings.[6]  The auditor obtains reasonable assurance by obtaining sufficient appropriate audit evidence to reduce audit risk to an acceptably low level.[7]  Audit risk is the risk that the auditor expresses an inappropriate audit opinion when the financial report is materially misstated.  Audit risk is a function of the risks of material misstatement and detection risk.[8]  Materiality and audit risk are considered throughout the audit, in particular, when:

(a)                Identifying and assessing the risks of material misstatement;[9]

(b)                Determining the nature, timing