Amendments to ASA 210Amendments to ASA 210

Amendments to ASA 210

1. Existing paragraph A24 is amended to read as follows:

The form and content of the audit engagement letter may vary for each entity. Information included in the audit engagement letter on the auditor’s responsibilities may be based on ASA 200.17 Paragraphs 6(b) and 12 deal with the description of the responsibilities of management. In addition to including the matters required by paragraph 10, an audit engagement letter may make reference to, for example:

 Elaboration of the scope of the audit, including reference to applicable legislation, regulations, Australian Auditing Standards, and ethical and other pronouncements of professional bodies to which the auditor adheres.

 The form of any other communication of results of the audit engagement.

 The requirement for the auditor to communicate key audit matters in the auditor’s report in accordance with ASA 701.18

 The fact that because of the inherent limitations of an audit, together with the inherent limitations of internal control, there is an unavoidable risk that some material misstatements may not be detected, even though the audit is properly planned and performed in accordance with Australian Auditing Standards.

 …

 A request for management to acknowledge receipt of the audit engagement letter and to agree to the terms of the engagement outlined therein.

 The expectation that management will provide a going concern assessment that covers a period of at least twelve months from the date of approval of the financial report.[19]

 The requirements for the auditor to describe in the auditor’s report how the auditor evaluated management’s assessment of the entity’s ability to continue as a going concern in accordance with ASA 570.[20]

 The requirement for the auditor to communicate key audit matters in the auditor’s report in accordance with ASA 701.[21]

1. Existing Appendix 1 is amended to read as follows:

Example of an Audit Engagement Letter

…

[The responsibilities of the auditor]

We will conduct our audit in accordance with Australian Auditing Standards. Those standards require that we comply with ethical requirements. As part of an audit in accordance with Australian Auditing Standards, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

 …

 Conclude and report on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.