Page 475 - CA Final PARAM Digital Book.

The auditor shall determine whether uncorrected misstatements are material,
individually or in aggregate.
In making this determination, the auditor shall consider:
• The size and nature of the misstatements, both in relation to particular classes of
transactions, account balances or disclosures and the financial statements as a
whole, and the particular circumstances of their occurrence; and
• The effect of uncorrected misstatements related to prior periods on the relevant
classes of transactions, account balances or disclosures, and the financial
statements as a whole.

➢ Communicate to TCWG all uncorrected misstatements. Identify material misstatements
individually, also uncorrected misstatements of previous period. Explain effect on opinion.

And request them to correct all misstatements.
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. The auditor’s communication shall identify material
uncorrected misstatements individually. The auditor shall request that uncorrected misstatements
be corrected. 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 statements as a whole.

➢ WR from Mgt / TCWG on whether they believe effects of misstatements in individual or
aggregate is immaterial. WR should have attached list of such misstatements.
The auditor shall request a written representation from management and, where appropriate,
those charged with governance whether they believe the effects of uncorrected misstatements
are immaterial, individually and in aggregate, to the financial statements as a whole. A summary of
such items shall be included in or attached to the written representation.

➢ Consider effect on Audit Opinion as per SA 705
Consider effect of uncorrected misstatements on Audit Opinion as per SA 705.

www.auditguru.in PARAM 20.10 | P a g e