Document ID: chunk:federal_register_of_legislation:F2021C01250:reg:27:p10
Version: federal_register_of_legislation:F2021C01250
Segment Type: reg
Provision Reference: reg 27 (pt 10/23)
Character Range: 35680–38734

to perform audit procedures unannounced or at unpredictable times (for example, performing audit procedures at selected locations on an unannounced basis).  This is particularly relevant when considering the response to the risks of fraud.  For example, the auditor may conclude that, when the risks of intentional misstatement or manipulation have been identified, audit procedures to extend audit conclusions from interim date to the period end would not be effective.

A12.         On the other hand, performing audit procedures before the period end may assist the auditor in identifying significant matters at an early stage of the audit, and consequently resolving them with the assistance of management or developing an effective audit approach to address such matters.

A13.         In addition, certain audit procedures can be performed only at or after the period end, for example:

           * Agreeing or reconciling information in the financial report with the underlying accounting records, including whether such information is obtained from within or outside of the general and subsidiary ledgers;

           * Examining adjustments made during the course of preparing the financial report; and

           * Procedures to respond to a risk that, at the period end, the entity may have entered into improper sales contracts, or transactions may not have been finalised.

A14.         Further relevant factors that influence the auditor's consideration of when to perform audit procedures include the following:

           * The control environment.

           * When relevant information is available (for example, electronic files may subsequently be overwritten, or procedures to be observed may occur only at certain times).

           * The nature of the risk (for example, if there is a risk of inflated revenues to meet earnings expectations by subsequent creation of false sales agreements, the auditor may wish to examine contracts available on the date of the period end).

           * The period or date to which the audit evidence relates.

           * The timing of the preparation of the financial report, particularly for those disclosures that provide further explanation about amounts recorded in the statement of financial position, the statement of comprehensive income, the statement of changes in equity or the statement of cash flows.

Extent

A15.         The extent of an audit procedure judged necessary is determined after considering the materiality, the assessed risk, and the degree of assurance the auditor plans to obtain.  When a single purpose is met by a combination of procedures, the extent of each procedure is considered separately.  In general, the extent of audit procedures increases as the risk of material misstatement increases.  For example, in response to the assessed risk of material misstatement due to fraud, increasing sample sizes or performing substantive analytical procedures at a more detailed level may be appropriate.  However, increasing the extent of an audit procedure is