Document ID: chunk:federal_register_of_legislation:F2022C01152:reg:4:p8
Version: federal_register_of_legislation:F2022C01152
Segment Type: reg
Provision Reference: reg 4 (pt 8/63)
Character Range: 33967–37349

of the Auditor's Report

21.               When the auditor's further audit procedures include obtaining audit evidence from events occurring up to the date of the auditor's report, the auditor shall evaluate whether such audit evidence is sufficient and appropriate to address the risks of material misstatement relating to the accounting estimate, taking into account that changes in circumstances and other relevant conditions between the event and the measurement date may affect the relevance of such audit evidence in the context of the applicable financial reporting framework. (Ref: Para. A91–A93)

Testing How Management Made the Accounting Estimate

22.               When testing how management made the accounting estimate, the auditor's further audit procedures shall include procedures, designed and performed in accordance with paragraphs 23–26, to obtain sufficient appropriate audit evidence regarding the risks of material misstatement relating to: (Ref: Para. A94)

(a)                The selection and application of the methods, significant assumptions and the data used by management in making the accounting estimate; and

(b)                How management selected the point estimate and developed related disclosures about estimation uncertainty.

Methods

23.               In applying the requirements of paragraph 22, with respect to methods, the auditor's further audit procedures shall address:

(a)                Whether the method selected is appropriate in the context of the applicable financial reporting framework, and, if applicable, changes from the method used in prior periods are appropriate; (Ref: Para. A95, A97)

(b)                Whether judgements made in selecting the method give rise to indicators of possible management bias; (Ref: Para. A96)

(c)                Whether the calculations are applied in accordance with the method and are mathematically accurate;

(d)                When management's application of the method involves complex modelling, whether judgements have been applied consistently and whether, when applicable: (Ref: Para. A98–A100)

(i)                 The design of the model meets the measurement objective of the applicable financial reporting framework, is appropriate in the circumstances, and, if applicable, changes from the prior period's model are appropriate in the circumstances; and

(ii)               Adjustments to the output of the model are consistent with the measurement objective of the applicable financial reporting framework and are appropriate in the circumstances; and

(e)                Whether the integrity of the significant assumptions and the data has been maintained in applying the method. (Ref: Para. A101)

Significant Assumptions

24.               In applying the requirements of paragraph 22, with respect to significant assumptions, the auditor's further audit procedures shall address:

(a)                Whether the significant assumptions are appropriate in the context of the applicable financial reporting framework, and, if applicable, changes from prior periods are appropriate; (Ref: Para. A95, A102–A103)

(b)                Whether judgements made in selecting the significant assumptions give rise to indicators of possible management bias; (Ref: Para. A96)

(c)                Whether the significant assumptions are consistent with each other and with