Document ID: chunk:federal_register_of_legislation:F2020L00252:body:0:p37
Version: federal_register_of_legislation:F2020L00252
Segment Type: other
Provision Reference: 
Character Range: 103445–106553

these inherent risk factors, and their inter-relationships, in the context of making accounting estimates and their presentation in the financial report.

147.           Existing paragraph A9 is amended to read as follows:

In addition to the inherent risk factors of estimation uncertainty, complexity or subjectivity, other inherent risk factors that the auditor may consider in identifying and When assessing the risks of material misstatement at the assertion level[33], in addition to estimation uncertainty, complexity, and subjectivity, the auditor also takes into account the degree  may include the extent to which inherent risk factors included in ASA 315, (other than estimation uncertainty, complexity, and subjectivity), affect susceptibility to misstatement of assertions to misstatement about the accounting estimate. Such additional inherent risk factors include is subject to, or affected by:

           * Change in the nature or circumstances of the relevant financial statement items, or requirements of the applicable financial reporting framework which may give rise to the need for changes in the method, assumptions or data used to make the accounting estimate.

           * Susceptibility to misstatement due to management bias, or other fraud risk factors insofar as they affect inherent risk, in making the accounting estimate.

           * Uncertainty, other than estimation uncertainty.

148.           Existing paragraph A10 is amended to read as follows:

An important consideration for the auditor iIn assessing control risk at the assertion level in accordance with ASA 315, the auditor takes into account is the effectiveness of the design of the controls that whether the auditor intends plans to rely test on the operating effectiveness of controls.  and the extent to which the controls address the assessed inherent risks at the assertion level.  When the auditor is considering whether to test the operating effectiveness of controls, Tthe auditor's evaluation that controls are effectively designed and have been implemented supports an expectation, by the auditor, about the operating effectiveness of the controls in determining whether establishing the plan to test them.

149.           Existing title under the section heading Risk Assessment Procedures and Related Activities is amended to read as follows:

Obtaining an Understanding of the Entity and Its Environment, the Applicable Financial Reporting Framework, and the Entity's System of Internal Control (Ref: Para. 13)

150.           Existing paragraph A19 is amended to read as follows:

Paragraphs 1911–2724 of ASA 315 require the auditor to obtain an understanding of certain matters about the entity and its environment, the applicable financial reporting framework and including the entity's system of internal control.  The requirements in paragraph 13 of this ASA relate more specifically to accounting estimates and build on the broader requirements in ASA 315.

151.           Existing paragraph A20 is amended to read as follows:

The nature, timing, and extent of the auditor's procedures to