Appendix No. 15

to the Order of the Ministry of Finance of the Russian Federation of January 9, 2019 No. 2n

The international standard of audit 450 "Assessment of the misstatements revealed during audit"

The International Standard of Audit (ISA) 450 "Assessment of the misstatements revealed during audit" should be considered together with MCA 200 "Main objectives of the independent auditor and carrying out audit according to International standards of audit".

Introduction

Scope of this standard

1. This International Standard of Audit (ISA) establishes the auditor's obligations on impact assessment of the revealed misstatements on audit and uncorrected misstatements if such are available, on the financial reporting. To establish obligation of the auditor in case of opinion formulation according to the financial reporting whether reasonable confidence that the financial reporting in general does not contain essential misstatements was received, is considered in MCA 700. The audit opinion provided by MCA 700 <1> shall consider assessment by the auditor of impact of uncorrected misstatements if such are available, on the financial reporting according to this standard. MCA 320 <2> establishes obligation of the auditor to apply the concept of materiality when planning and carrying out financial records audit.

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<1> MCA 700 (reviewed) "Forming of opinion and creation of the conclusion about the financial reporting", Items 10 - 11.

<2> MCA 320 "Materiality in case of planning and carrying out audit".

The effective date

2. This standard becomes effective concerning financial records audit for the periods beginning on December 15, 2009 or after this date.

Purpose

3. The purpose of the auditor consists in estimating:

(a) impact of the revealed misstatements on the booked audit;

(b) impact of uncorrected misstatements if such are available, on the financial reporting.

Determinations

4. For the purposes of International standards of audit the following terms have the stated below values:

(a) misstatement - discrepancy between the amount included in the reporting, classification, representation or disclosure of information in the financial reporting and the amount, classification, representation or disclosure of information which are required according to the applicable concept of preparation of the financial reporting. Misstatements can be consequence of unfair actions or mistakes (see Item A 1).

If the auditor expresses opinion on whether the financial reporting authentically reflects provision in all essential relations in the organization, or about, whether it gives truthful and fair idea of it, those not reflected adjustments of the amounts, classifications, representation or disclosure of information which, according to judgment of the auditor, are necessary in order that the financial reporting was provided authentically in all essential relations will also belong to misstatements or gave truthful and fair idea;

(b) uncorrected misstatements - the misstatements revealed by the auditor during audit which were not corrected.

Requirements

Accumulating of the revealed misstatements

5. The misstatements revealed during audit except for those which are obviously insignificant shall be saved up by the auditor (see the Items A2 - A 6).

The analysis of the revealed misstatements during audit

6. The auditor shall determine whether there is need to review general strategy of audit and the plan of audit if:

(a) nature of the revealed misstatements and circumstance of their origin are specified that can exist and other misstatements which in total with the misstatements which are saved up during the booked audit can be essential (see Item A 7);

(b) set of the misstatements which are saved up during the booked audit approaches the materiality determined according to MCA 320 (see Item A 8).

7. If at the request of the auditor the management of the organization analysed transaction type, account balances or disclosure of information also corrected the found misstatements, the auditor shall perform supplementary audit procedures with the purpose to determine whether any misstatements (see Item A 9) remained.

Informing on misstatements and their correction

8. The auditor shall inform timely management of appropriate level on all misstatements which are saved up during the booked audit, except as specified, when it is banned by law or the regulation>. The auditor shall ask management of the organization to correct these misstatements (see the Items A10 - A 12).

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<3> MCA 260 (reviewed) "Information exchange with persons who are responsible for corporate management", Item 7.

9. If the management refuses to correct all or some misstatements on which it was informed by the auditor, then he shall understand the reasons for which the management of the organization does not correct misstatement and to consider it in case of assessment of whether really the financial reporting in general contains essential misstatement (see Item A 13).

Assessment of impact of uncorrected misstatements

10. Before starting assessment of impact of uncorrected misstatements, the auditor shall make revaluation of the materiality established according to MSA 320, to confirm whether it keeps the relevance in the context of the actual financial results of the organization (see the Items A14 - A 15).

11. The auditor shall determine whether uncorrected misstatements are essential as in itself, and in total with other misstatements. In case of removal of this judgment the auditor shall consider the following questions:

(a) the size and nature of misstatements as concerning separate transaction types, account balances or disclosure of information, and concerning the financial reporting in general, and also specific circumstances of emergence of such misstatements (see the Items A16 - A 22, A24 - A 25);

(b) impact of the uncorrected misstatements relating to preceding periods on the corresponding transaction types, account balances or disclosure of information and on the financial reporting in general (see Item A 23).

Information exchange with persons who are responsible for corporate management

12. The auditor shall report to persons who are responsible for corporate management about uncorrected misstatements and impact which such misstatements in itself or in total with other misstatements can render on opinion of the auditor in audit opinion, except as specified, when it is banned by law or the regulation. <4> The message of the auditor shall describe each essential uncorrected misstatement separately. The auditor shall offer that uncorrected misstatements were corrected (see the Items A26 - A 28).

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<4> See footnote 3.

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