Document ID: chunk:federal_register_of_legislation:F2016C00028:reg:26:p8
Version: federal_register_of_legislation:F2016C00028
Segment Type: reg
Provision Reference: reg 26 (pt 8/47)
Character Range: 29176–32402

of routine and significant classes of transactions or account balances, the characteristics of which often permit highly automated processing with little or no manual intervention.  In such cases, the entity's controls over such risks are relevant to the audit and the auditor shall obtain an understanding of them.  (Ref: Para. A149‑A151)

Revision of Risk Assessment

31.               The auditor's assessment of the risks of material misstatement at the assertion level may change during the course of the audit as additional audit evidence is obtained.  In circumstances where the auditor obtains audit evidence from performing further audit procedures, or if new information is obtained, either of which is inconsistent with the audit evidence on which the auditor originally based the assessment, the auditor shall revise the assessment and modify the further planned audit procedures accordingly.  (Ref: Para. A152)

Documentation

32.               The auditor shall include in the audit documentation:[2]

(a)                The discussion among the engagement team where required by paragraph 10 of this Auditing Standard, and the significant decisions reached;

(b)                Key elements of the understanding obtained regarding each of the aspects of the entity and its environment specified in paragraph 11 of this Auditing Standard and of each of the internal control components specified in paragraphs 14-24 of this Auditing Standard; the sources of information from which the understanding was obtained; and the risk assessment procedures performed;

(c)                The identified and assessed risks of material misstatement at the financial report level and at the assertion level as required by paragraph 25 of this Auditing Standard; and

(d)                The risks identified, and related controls about which the auditor has obtained an understanding, as a result of the requirements in paragraphs 27-30 of this Auditing Standard.  (Ref: Para. A153-A156)

* * *

Application and Other Explanatory Material

Risk Assessment Procedures and Related Activities (Ref: Para. 5)

A1.             Obtaining an understanding of the entity and its environment, including the entity's internal control (referred to hereafter as an "understanding of the entity"), is a continuous, dynamic process of gathering, updating and analysing information throughout the audit.  The understanding establishes a frame of reference within which the auditor plans the audit and exercises professional judgement throughout the audit, for example, when:

           * Assessing risks of material misstatement of the financial report;

           * Determining materiality in accordance with ASA 320;[3]

           * Considering the appropriateness of the selection and application of accounting policies, and the adequacy of financial report disclosures;

           * Identifying areas relating to amounts or disclosures in the financial report where special audit consideration may be necessary, for example: related party transactions, or management assessment of the entity's ability to continue as a going concern , or when considering the business purpose of transactions;

           * Developing expectations