Evaluation of MisstatementsEvaluation of Misstatements

Evaluation of Misstatements

51 The auditor shall evaluate, individually and in the aggregate, whether uncorrected misstatements that have come to the auditor’s attention are material to the interim financial report.

52 A review of an interim financial report, in contrast to an audit engagement, is not designed to obtain reasonable assurance that the interim financial report is free from material misstatement. However, under paragraph 51 of this Auditing Standard, misstatements which come to the auditor’s attention, including inadequate disclosures, need to be evaluated individually and in the aggregate to determine whether a material adjustment is required to be made to the interim financial report for it to be prepared, in all material respects, in accordance with the applicable financial reporting framework.

53 Under paragraph 51 of this Auditing Standard, the auditor needs to exercise professional judgement in evaluating the materiality of any misstatements that the entity has not corrected. Ordinarily, the auditor considers matters such as the nature, cause and amount of the misstatements, whether the misstatements originated in the preceding year or interim period of the current year, and the potential effect of the misstatements on future interim or annual periods.

54 The auditor may designate an amount below which misstatements need not be aggregated, because the auditor expects that the aggregation of such amounts clearly would not have a material effect on the interim financial report. In so doing, under paragraph 26 of this Auditing Standard, the auditor needs to consider the fact that the determination of materiality involves quantitative as well as qualitative considerations and that misstatements of a relatively small amount could nevertheless have a material effect on the interim financial report.