Evaluating the Effect of Uncorrected MisEvaluating the Effect of Uncorrected Misstatements

Evaluating the Effect of Uncorrected Misstatements

1. Prior to evaluating the effect of uncorrected misstatements, the auditor shall reassess materiality determined in accordance with ASA 320 to confirm whether it remains appropriate in the context of the entity’s actual financial results. (Ref: Para. A14‑A15)
2. The auditor shall determine whether uncorrected misstatements are material, individually or in aggregate. In making this determination, the auditor shall consider:
   1. The size and nature of the misstatements, both in relation to particular classes of transactions, account balances or disclosures and the financial report as a whole, and the particular circumstances of their occurrence; and (Ref: Para. A16‑A22, A24‑A25)
   2. The effect of uncorrected misstatements related to prior periods on the relevant classes of transactions, account balances or disclosures, and the financial report as a whole. (Ref: Para. A23)

Communication with Those Charged with Governance

1. The auditor shall communicate with those charged with governance uncorrected misstatements and the effect that they, individually or in aggregate, may have on the opinion in the auditor’s report, unless prohibited by law or regulation.[4] The auditor’s communication shall identify material uncorrected misstatements individually. The auditor shall request that uncorrected misstatements be corrected. (Ref: Para. A26‑A28)
2. The auditor shall also communicate with those charged with governance the effect of uncorrected misstatements related to prior periods on the relevant classes of transactions, account balances or disclosures, and the financial report as a whole.