Document ID: chunk:federal_register_of_legislation:F2023C01130:body:0:p12
Version: federal_register_of_legislation:F2023C01130
Segment Type: other
Provision Reference: 
Character Range: 37286–40584

use of IT; and

         (ii)               The entity's general IT controls that address such risks.

Control Deficiencies Within the Entity's System of Internal Control

27.               Based on the auditor's evaluation of each of the components of the entity's system of internal control, the auditor shall determine whether one or more control deficiencies have been identified.  (Ref: Para. A182–A183)

Identifying and Assessing the Risks of Material Misstatement (Ref: Para. A184‒A185)

Identifying Risks of Material Misstatement

28.               The auditor shall identify the risks of material misstatement and determine whether they exist at: (Ref: Para. A186–A192)

(a)                The financial report level; (Ref: Para. A193–A200) or

(b)                The assertion level for classes of transactions, account balances and disclosures.  (Ref: Para. A201)

29.               The auditor shall determine the relevant assertions and the related significant classes of transactions, account balances and disclosures.  (Ref: Para. A202–A204)

Assessing Risks of Material Misstatement at the Financial Report Level

30.               For identified risks of material misstatement at the financial report level, the auditor shall assess the risks and: (Ref: Para. A193–A200)

(a)                Determine whether such risks affect the assessment of risks at the assertion level; and

(b)                Evaluate the nature and extent of their pervasive effect on the financial report.

Assessing Risks of Material Misstatement at the Assertion Level

Assessing Inherent Risk (Ref: Para. A205–A217)

31.               For identified risks of material misstatement at the assertion level, the auditor shall assess inherent risk by assessing the likelihood and magnitude of misstatement.  In doing so, the auditor shall take into account how, and the degree to which:

(a)                Inherent risk factors affect the susceptibility of relevant assertions to misstatement; and

(b)                The risks of material misstatement at the financial report level affect the assessment of inherent risk for risks of material misstatement at the assertion level.  (Ref: Para. A215‒A216)

32.               The auditor shall determine whether any of the assessed risks of material misstatement are significant risks.  (Ref: Para. A218–A221)

33.               The auditor shall determine whether substantive procedures alone cannot provide sufficient appropriate audit evidence for any of the risks of material misstatement at the assertion level.  (Ref: Para. A222–A225)

Assessing Control Risk

34.               If the auditor plans to test the operating effectiveness of controls, the auditor shall assess control risk.  If the auditor does not plan to test the operating effectiveness of controls, the auditor's assessment of control risk shall be such that the assessment of the risk of material misstatement is the same as the assessment of inherent risk.  (Ref: Para. A226–A229)

Evaluating the Audit Evidence Obtained from the Risk Assessment Procedures

35.               The auditor shall evaluate whether the audit evidence obtained from the risk assessment procedures provides an appropriate basis for the identification and assessment of the risks of material misstatement.