ROMM and matters to consider

Thinking about a “matters to consider” question:

I think materiality comes first but then whether you consider 2 then 3 or 3 then 2 doesn’t matter. What you must consider for 3 is what they HAVE done/ARE doing wrong (not what they could be doing wrong, which could be something else).

Other potential matters to consider are things like:
1. risk of management bias
2. sufficiency of evidence (you wouldn’t list the evidence you would expect to find under matters – as that should be kept quite separate), but if you can see that there is an evidence issue it could be a “matter to consider”
3. estimation uncertainty/professional judgement involved (in the particular matter)
4. any or all of the above could raise your “professional scepticism”

A question will generally ask for “matters to consider [and evidence]” in the context of audit completion (review stage). But “matters to consider” may also arise in the context of ethics and other professional issues (e.g. engagement acceptance, quality control, professional liability).

It will be the planning question (Q1) which will most likely call for an evaluation of “audit risk”. Evaluating the risk of material misstatement will certainly include consideration of materiality and the impact on the financial statements but would not necessarily include an analysis of accounting treatment – what it should be vs what it is or could be. For example, if you can see a deterioration in liquidity which appears to be linked to a substantial increase in receivable days and/or there are indications of poor credit control – you might conclude that there is a risk of overstatement of receivables (if insufficient allowance is made for irrecoverable debts). You don’t need to try to discuss an accounting treatment in IFRS terms.