Document ID: chunk:federal_register_of_legislation:F2020L00252:body:0:p8
Version: federal_register_of_legislation:F2020L00252
Segment Type: other
Provision Reference: 
Character Range: 22011–25209

risks of material misstatement at the assertion level, including significant risks, for accounting estimates at the assertion level in accordance with ASA 330.20 In identifying and assessing risks of material misstatement for significant classes of transactions, account balances or disclosures other than accounting estimates, the auditor may make separate or combined assessments of inherent and control risk depending on preferred audit techniques or methodologies and practical considerations.

20.               The following paragraph A46 is inserted following existing paragraph A43 of this Auditing Standard:

    Risks of material misstatement are assessed at the assertion level in order to determine the nature, timing and extent of further audit procedures necessary to obtain sufficient appropriate audit evidence.21

21.               As a result of the insertion of the paragraph above, subsequent paragraphs and footnotes of this Auditing Standard are re-numbered and references to these paragraphs and footnotes are updated accordingly.

22.               Existing footnote 23 in paragraph A52 is amended to read as follows:

See ASA 315, paragraphs 5-1013-18.

23.               Existing paragraph A61 is amended to read as follows:

    Where necessary, the application and other explanatory material provides further explanation of the requirements of an ASA and guidance for carrying them out.  In particular, it may:

           * Explain more precisely what a requirement means or is intended to cover, including in some ASAs such as ASA 315, why a procedure is required.

           * Include examples of procedures that may be appropriate in the circumstances. In some ASAs, such as ASA 315, examples are presented in boxes.

    …

24.               The heading "Considerations Specific to Smaller Entities" above existing A66 has been amended to "Scalability Considerations" and the following paragraph A69 is inserted following the heading "Scalability Considerations".

Scalability considerations have been included in some ASAs (e.g., ASA 315), illustrating the application of the requirements to all entities regardless of whether their nature and circumstances are less complex or more complex. Less complex entities are entities for which the characteristics in paragraph A66 may apply.

25.               Existing paragraph A67 is now moved to paragraph A70 and is amended to read as follows:

The "considerations specific to smaller entities" included in some the ASAs have been developed primarily with unlisted entities in mind.  Some of the considerations, however, may be helpful in audits of smaller listed entities.

26.               As a result of the changes above, subsequent paragraphs of this Auditing Standard are re-numbered and references to these paragraphs are updated accordingly.

27.               Existing paragraph A66 is amended to read as follows:

    For purposes of specifying additional considerations to audits of smaller entities, a "smaller entity" refers to an entity which typically possesses qualitative characteristics such as:

    …

     (b) One or more of the following:

    …

         (iv) Simpler systems of Few internal