DevyaniDevyani asked 1 year ago

if misstatement is found of Prior periods, although audit is done for PY, yet management can rectify it?(whether such misstatements are material or not) The auditor shall ask TCWG to correct uncorrected misstatement. This includes material as well as not material uncorrected misstatements You said take written representation for immaterial misstatement. So these Written note is immaterial according to auditor’s judgment or mgmt’s judgment?

3 Answers
DevyaniDevyani answered 1 year ago

Plz provide point 4 & thereafter of SA 450. its not printed

RaviRavi Staff answered 1 year ago

1.Accumulate misstatements unless clearly trivial. 
2.Revision of Overall Audit Strategy & Audit Plan: – if aggregate misstatement reaches materiality or if aggregate misstatements & other misstatements which may exist together reaches materiality.
3.Communicate on timely basis all misstatements and request to correct them.
4.Additional Audit Procedure to check corrections.
5.Mgt Refusal / Uncorrected Misstatement: – If Mgt refuses understand reasons & evaluate whether FST are materially misstated
6.Reassesses materiality before evaluating impact of uncorrected misstatements.

  1. While Evaluation impact of misstatements consider them individually or in aggregate. Consider size as well as nature of misstatement at TBD level and FST level. Also consider effect of uncorrected misstatements of prior periods while aggregating misstatements.

8.Communicate to TCWG all uncorrected misstatements. Identify material misstatements individually, also uncorrected misstatements of previous period. Explain effect on opinion. And request them to correct all misstatements.
9.WR from Mgt / TCWG on whether they believe effects of misstatements in individual or aggregate is immaterial. WR should have attached list of such misstatements.
10.Consider effect on Audit Opinion as per SA 705

RaviRavi Staff answered 1 year ago

materiality is set by auditor and same is followed. 

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