Definition of Misstatement (Ref: Para. 4Definition of Misstatement (Ref: Para. 4(a))

Definition of Misstatement (Ref: Para. 4(a))

1. Misstatements may result from:
   1. An inaccuracy in gathering or processing data from which the financial report is prepared;
   2. An omission of an amount or disclosure, including inadequate or incomplete disclosures, and those disclosures required to meet disclosure objectives of certain financial reporting frameworks as applicable[6];
   3. An incorrect accounting estimate arising from overlooking, or clear misinterpretation of, facts;
   4. Judgements of management concerning accounting estimates that the auditor considers unreasonable or the selection and application of accounting policies that the auditor considers inappropriate.
   5. An inappropriate classification, aggregation or disaggregation, of information; and
   6. For a financial report prepared in accordance with a fair presentation framework, the omission of a disclosure necessary for the financial report to achieve fair presentation beyond disclosures specifically required by the framework.[7]

Examples of misstatements arising from fraud are provided in ASA 240.[8]