SA 450 — Evaluation of Misstatements Identified During the Audit

Issued by ICAI AASB · Concluding

Aggregation, classification, communication and final evaluation of misstatements.

Objective

To evaluate the effect of identified misstatements on the audit and of uncorrected misstatements on the financial statements.

Key requirements

Accumulation of misstatements (other than clearly trivial)
Classification by type — factual, judgemental, projected
Communication to management on a timely basis; request for correction
Evaluation of effect of uncorrected misstatements — both individually and in aggregate
Reassessment of materiality if misstatements approach or exceed it

Typical procedures

Summary of Audit Differences (SUM/SAD) schedule
Schedule of unadjusted misstatements appended to MRL
Communication of uncorrected misstatements to TCWG (SA 260)

Common pitfalls

Below-CTT items lumped into "trivial" without separate evaluation
Aggregation across periods (current vs prior) not considered
No formal SUM/SAD schedule in the file

On CORAA

Findings classified into Above-PM / Above-CTT / Below-CTT bands automatically. Findings above performance materiality block the SA 700 sign-off until cleared. Open the matching module →

SA 450 in practice

SA 450 sits in the Concluding phase of the audit. The Standards on Auditing are issued by the ICAI Auditing and Assurance Standards Board (AASB) and deemed to be prescribed by the Central Government under Section 143(10) of the Companies Act 2013. Compliance with SAs is mandatory for every audit conducted by a Chartered Accountant in India.

For authoritative text, refer to the ICAI AASB Compendium of Standards on Auditing at icai.org.

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