Document ID: chunk:federal_register_of_legislation:F2023C01130:body:0:p22
Version: federal_register_of_legislation:F2023C01130
Segment Type: other
Provision Reference: 
Character Range: 66601–69737

whether changes have occurred that may affect the relevance or reliability of such information, the auditor may make enquiries and perform other appropriate audit procedures, such as walk-throughs of relevant systems.  If the information is not reliable, the auditor may consider performing additional procedures that are appropriate in the circumstances.

Engagement Team Discussion (Ref: Para. 17–18)

Why the Engagement Team Is Required to Discuss the Application of the Applicable Financial Reporting Framework and the Susceptibility of the Entity's Financial report to Material Misstatement

A42.         The discussion among the engagement team about the application of the applicable financial reporting framework and the susceptibility of the entity's financial report to material misstatement:

           * Provides an opportunity for more experienced engagement team members, including the engagement partner, to share their insights based on their knowledge of the entity.  Sharing information contributes to an enhanced understanding by all engagement team members.

           * Allows the engagement team members to exchange information about the business risks to which the entity is subject, how inherent risk factors may affect the susceptibility to misstatement of classes of transactions, account balances and disclosures, and about how and where the financial report might be susceptible to material misstatement due to fraud or error.

           * Assists the engagement team members to gain a better understanding of the potential for material misstatement of the financial report in the specific areas assigned to them, and to understand how the results of the audit procedures that they perform may affect other aspects of the audit, including the decisions about the nature, timing and extent of further audit procedures.  In particular, the discussion assists engagement team members in further considering contradictory information based on each member's own understanding of the nature and circumstances of the entity.

           * Provides a basis upon which engagement team members communicate and share new information obtained throughout the audit that may affect the assessment of risks of material misstatement or the audit procedures performed to address these risks.

ASA 240 requires the engagement team discussion to place particular emphasis on how and where the entity's financial report may be susceptible to material misstatement due to fraud, including how fraud may occur.[26]

A43.         Professional scepticism is necessary for the critical assessment of audit evidence, and a robust and open engagement team discussion, including for recurring audits, may lead to improved identification and assessment of the risks of material misstatement.  Another outcome from the discussion may be that the auditor identifies specific areas of the audit for which exercising professional scepticism may be particularly important, and may lead to the involvement of more experienced members of the engagement team who are appropriately skilled to be involved in the performance of audit procedures