Overall Evaluation Based on Audit ProcedOverall Evaluation Based on Audit Procedures Performed

Overall Evaluation Based on Audit Procedures Performed

1. In applying ASA 330 to accounting estimates,[21] the auditor shall evaluate, based on the audit procedures performed and audit evidence obtained, whether: (Ref: Para A137–A138)
   1. The assessments of the risks of material misstatement at the assertion level remain appropriate, including when indicators of possible management bias have been identified;
   2. Management’s decisions relating to the recognition, measurement, presentation and disclosure of these accounting estimates in the financial report are in accordance with the applicable financial reporting framework; and
   3. Sufficient appropriate audit evidence has been obtained.
2. In making the evaluation required by paragraph 33(c), the auditor shall take into account all relevant audit evidence obtained, whether corroborative or contradictory.[22] If the auditor is unable to obtain sufficient appropriate audit evidence, the auditor shall evaluate the implications for the audit or the auditor’s opinion on the financial report in accordance with ASA 705.[23]

Determining Whether the Accounting Estimates are Reasonable or Misstated

1. The auditor shall determine whether the accounting estimates and related disclosures are reasonable in the context of the applicable financial reporting framework, or are misstated. ASA 450[24] provides guidance on how the auditor may distinguish misstatements (whether factual, judgemental, or projected) for the auditor’s evaluation of the effect of uncorrected misstatements on the financial report. (Ref: Para. A12–A13, A139–A144)
2. In relation to accounting estimates, the auditor shall evaluate:
   1. In the case of a fair presentation framework, whether management has included disclosures, beyond those specifically required by the framework, that are necessary to achieve the fair presentation of the financial report as a whole;[25] or
   2. In the case of a compliance framework, whether the disclosures are those that are necessary for the financial report not to be misleading.[26]