(U, B, F)

(D, Z, M)

(D, Y, H)

(U, A)

(UM, BZ, FH)

(D, Z, M)

(DM, Z, H)

(DM, BZ, FH)

Non-numeric items in the financial statements need to be assessed to determine if they contain material errors.

Planning materiality for each account in the balance sheet and income statement is set between 5% and 10% of that account’s value.

There is an inverse relationship between planning materiality and risk.

Planning materiality must be periodically revised to take into account new information about the risk of the client that is revealed during the conduct of the audit.

The client accepts responsibility for maintaining a system of internal control to allow the preparation of financial statements that are true and fair.

The client agrees to indemnify the auditor against any losses caused by fraud in the preparation of the financial statements.

The client accepts responsibility for the preparation of financial statements that present a true and fair view

The client agrees to guarantee the auditor access to people, accounting records and other information that will allow the auditor to gather sufficient appropriate evidence on which to base the audit report

Compliance with ASAs is recommended but not required, provided that the auditor can collect sufficient appropriate evidence to express the audit opinion required by s308(1) of the Corporations Act (2001)

Compliance with ASAs is not mandatory under the Corporations Act (2001) but is required by the professional accounting bodies (CAANZ and CPAA) as a condition of membership

All company audits must comply with ASAs as required by s307A of the Corporations Act (2001)

Compliance with ASAs is only required when auditing ASX listed companies

Application and Other Explanatory Material

Definitions

Introduction

Appendices

Issue an audit report with an unmodified audit opinion

Fix the errors and then issue an audit report with a qualified audit opinion

Ask the client to fix the errors and, if they do so, then issue an audit report with an unmodified audit opinion and if they don’t issue an audit report with a qualified audit opinion

Issue an audit report with a qualified audit opinion

Suitable criteria

An appropriate subject matter

A set of auditing standards

A three-party relationship