Document from CIS Legislation database © 2003-2022 SojuzPravoInform LLC

The document ceased to be valid since  July 30, 2021 according to the Order of the Minister of Finance of the Republic of Uzbekistan of July 2, 2021 No. 43

Registered by

Ministry of Justice

Republic of Uzbekistan

On September 3, 1999 No. 813

Approved by the Ministry of Finance of the Republic of Uzbekistan of August 4, 1999, No. 63

National Audit standard of the Republic of Uzbekistan NSA No. 9 "Materiality and audit risk"

General provisions

1. This standard is developed on the basis of the Law of the Republic of Uzbekistan "About auditor activities", resolutions of the Cabinet of Ministers of the Republic of Uzbekistan of June 10, 1999 N296 "About Measures for Realization of the Basic Provisions Containing in the Report of the President of the Republic of Uzbekistan at the XIV Session of Oliy Majlis" also is element of normative auditing regulation in the Republic of Uzbekistan.

Purpose and tasks of the standard

2. The purpose of the standard is determination of actions auditor the organizations for materiality level assessment in audit arising during audit of business entity.

3. Tasks of the standard are:

3.1. Determine concept of level of materiality of audit and procedure for its calculation.

3.2. Determine concept of risk of audit and its main components.

3.3. Formulate single requirements by which auditing organizations shall be guided, using these concepts of the audit implementation course.

Coverage

4. Requirements of this standard are obligatory for all auditing organizations when implementing the audit providing preparation of official audit opinion, except for those its provisions where it is directly specified that they have advisory nature.

5. Requirements of this standard have advisory nature when carrying out the audit which is not providing preparation by its results of official audit opinion and also when rendering the services (consulting services) accompanying audit. In case of variation in case of accomplishment of specific task from mandatory requirements of this standard the auditing organization without fail shall note it in the working documentation and in the written report to management of the business entity who ordered audit and (or) services accompanying it.

Concept of materiality

6. The circumstances considerably influencing reliability of the financial reporting of business entity are recognized essential audit.

7. Reliability of the financial reporting in all essential relations is understood as such degree of accuracy of indicators of the financial reporting in case of which the skilled user of this reporting is able to draw the correct conclusions on its basis and to make the correct decisions. Materiality of information is its property which does it capable to influence decisions of the reasonable user of such information.

8. Level of materiality is understood as extreme value of misstatement of the financial reporting since which the skilled user of this reporting will stop being the correct conclusions and to make the correct decisions which are able to draw on its basis.

9. When finding absolute value of level of materiality the auditor shall assume as a basis the most important indicators characterizing reliability of the reporting of the business entity who is subject to audit, further called by basic indicators of the financial reporting.

10. The auditor shall consider materiality in case of:

determination of the nature, time and depth of audit procedures;

impact assessments of misstatements.

Concept of audit risk

11. The audit risk is the probability which is subjectively determined by the auditor to recognize following the results of audit inspection that the financial reporting may contain undetected essential misstatements after confirmation of its reliability or to recognize that it contains essential misstatements when actually there are no such misstatements in the financial reporting.

12. The audit risk includes two components:

12.1. Inherent risk.

12.2. Control risk.

12.3. Risk of nondetection of mistakes and misstatements of the financial reporting.

13. The auditor when carrying out audit shall take necessary measures to reduce audit risk to the reasonable minimum level.

Inherent risk

14. The inherent risk consists in exposure of balance or category of transactions to misstatement which can have material nature. The inherent risk is influenced by nature of the balance sheet or category of transactions.

15. Assessment of inherent risk is based on knowledge the auditor of features of activities of the client, its organizational structure and characteristics of its enterprise management.

16. The auditor by preparation of the general plan of audit shall estimate inherent risk concerning balance sheet items and indicators of the financial reporting, using the professionalism.

17. In case of assessment of inherent risk the auditor can use materials of audit of last years, at the same time he should be convinced of justice of estimates of this risk and for the checked year.

18. The following factors can affect inherent risk:

18.1. Difficult calculations have big degree of probability to be financially distorted, than simple.

18.2. Cash is subject to theft.

18.3. Accounts which consist of the amounts following from estimate assumptions create big risk degree, than the accounts consisting of rather settled actual data.

18.4. Technological achievements can make obsolete any specific products, having become the reason of considerable overestimate of inventories.

18.5. The industry which is on the decline which is characterized by considerable number of failures in business and insufficient working capital, contributes to the fact that the management of the company of the client can go for misstatement of the financial reporting.

Control risk

19. The control risk represents probability of that, the means of system of financial accounting and internal control system existing in business entity and regularly applied will timely not find and correct the misstatements which are essential separately or in total and (or) to interfere with emergence of such violations.

20. The control risk characterizes degree of reliability of system of financial accounting and internal control system of business entity.

21. The auditor, using the professionalism, shall estimate the control system of business entity, the control circle and separate control facilities during audit.

22. The auditor shall apply testing of control facilities to risk assessment of control facilities.

23. Testing of control facilities consists from:

23.1. Verifications of the documents reflecting carrying out financial and economic activities, and obtaining with respect thereto auditor proofs that control facilities functioned properly.

23.2. Polls and observation of registration of transactions with the purpose to obtain the auditor evidence of functioning of control facilities in cases when it is impossible to receive positive documentary confirmations of it.

23.3. Uses of results of other audit procedures for data acquisition about operability of control facilities.

Warning!!!

This is not a full text of document! Document shown in Demo mode!

If you have active License, please Login, or get License for Full Access.

With Full access you can get: full text of document, original text of document in Russian, attachments (if exist) and see History and Statistics of your work.

Get License for Full Access Now

Disclaimer! This text was translated by AI translator and is not a valid juridical document. No warranty. No claim. More info

Effectively work with search system

Database include more 50000 documents. You can find needed documents using search system. For effective work you can mix any on documents parameters: country, documents type, date range, teams or tags.
More about search system

Get help

If you cannot find the required document, or you do not know where to begin, go to Help section.

In this section, we’ve tried to describe in detail the features and capabilities of the system, as well as the most effective techniques for working with the database.

You also may open the section Frequently asked questions. This section provides answers to questions set by users.

Search engine created by SojuzPravoInform LLC. UI/UX design by Intelliants.