International Auditing and Assurance Standards Board ISA 450 April 2009 International Standard on Auditing Evaluation of Misstatements Identified during the Audit 1International Auditing and Assurance Standards Board International Federation of Accountants 545 Fifth Avenue, 14th Floor New York, New York 10017 USA This International Standard on Auditing (ISA) 450, “Evaluation of Misstatements Identified during the Audit” was prepared by the International Auditing and Assurance Standards Board (IAASB), an independent standard-setting body within the International Federation of Accountants (IFAC). The objective of the IAASB is to serve the public interest by setting high quality auditing and assurance standards and by facilitating the convergence of international and national standards, thereby enhancing the quality and uniformity of practice throughout the world and strengthening public confidence in the global auditing and assurance profession. This publication may be downloaded free of charge from the IFAC website: http:/www.ifac.org. The approved text is published in the English language. The mission of IFAC is to serve the public interest, strengthen the worldwide accountancy profession and contribute to the development of strong international economies by establishing and promoting adherence to high quality professional standards, furthering the international convergence of such standards and speaking out on public interest issues where the professions expertise is most relevant. Copyright April 2009 by the International Federation of Accountants (IFAC). All rights reserved. Permission is granted to make copies of this work provided that such copies are for use in academic classrooms or for personal use and are not sold or disseminated and provided that each copy bears the following credit line: “Copyright April 2009 by the International Federation of Accountants (IFAC). All rights reserved. Used with permission of IFAC. Contact permissionsifac.org for permission to reproduce, store or transmit this document.” Otherwise, written permission from IFAC is required to reproduce, store or transmit, or to make other similar uses of, this document, except as permitted by law. Contact permissionsifac.org. ISBN: 978-1-934779-010-6 2INTERNATIONAL STANDARD ON AUDITING 450 EVALUATION OF MISSTATEMENTS IDENTIFIED DURING THE AUDIT (Effective for audits of financial statements for periods beginning on or after December 15, 2009) CONTENTS Paragraph Introduction Scope of this ISA . 1 Effective Date . 2 Objective . 3 Definitions . 4 Requirements Accumulation of Identified Misstatements . 5 Consideration of Identified Misstatements as the Audit Progresses . 67 Communication and Correction of Misstatements . 89 Evaluating the Effect of Uncorrected Misstatements . 1013 Written Representation . 14 Documentation . 15 Application and Other Explanatory Material Definition of Misstatement . A1 Accumulation of Identified Misstatements . A2A3 Consideration of Identified Misstatements as the Audit Progresses . A4A6 Communication and Correction of Misstatements . A7A10 Evaluating the Effect of Uncorrected Misstatements . A11A23 Written Representation . A24 Documentation . A25 EVALUATION OF MISSTATEMENTS IDENTIFIED DURING THE AUDIT 3International Standard on Auditing (ISA) 450, “Evaluation of Misstatements Identified during the Audit” should be read in the context of ISA 200, “Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with International Standards on Auditing.” EVALUATION OF MISSTATEMENTS IDENTIFIED DURING THE AUDIT 4Introduction Scope of this ISA 1. This International Standard on Auditing (ISA) deals with the auditors responsibility to evaluate the effect of identified misstatements on the audit and of uncorrected misstatements, if any, on the financial statements. ISA 700 deals with the auditors responsibility