Document ID: chunk:federal_register_of_legislation:F2020L00252:body:0:p36
Version: federal_register_of_legislation:F2020L00252
Segment Type: other
Provision Reference: 
Character Range: 100556–103723

its environment, including how transactions and other events or conditions are subject to, or affected by, the inherent risk factors affect susceptibility to misstatement of assertions.  (Ref: Para. A24–A25)

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    Obtaining an Understanding of tThe Entity's System of Internal Control

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     (h) The entity's information system as it relates to accounting estimates, including:

(i)                 How information relating to accounting estimates and related disclosures for significant classes of transactions, account balances or disclosures flows through the entity's information system The classes of transactions, events and conditions, that are significant to the financial report and that give rise to the need for, or changes in, accounting estimates and related disclosures; and (Ref: Para. A34–A35)

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(i) Identified controls in the control activities component[9] Control activities relevant to the audit over management's process for making accounting estimates as described in paragraph 13(h)(ii).  (Ref: Para. A50–A54)

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143.           Existing paragraph 16 is amended to read as follows:

In identifying and assessing the risks of material misstatement relating to an accounting estimate and related disclosures at the assertion level, including separately assessing inherent risk and control risk at the assertion level, as required by ASA 315,[10] the auditor shall separately assess inherent risk and control risk.  The auditor shall take the following into account in identifying the risks of material misstatement and in assessing inherent risk: (Ref: Para. A64–A71)

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144.           Existing paragraph 17 is amended to read as follows:

The auditor shall determine whether any of the risks of material misstatement identified and assessed in accordance with paragraph 16 are, in the auditor's judgement, a significant risk.[11] If the auditor has determined that a significant risk exists, the auditor shall identify controls that obtain an understanding of the entity's controls, including control activities, relevant to address that risk,.[12] and evaluate whether such controls have been designed effectively, and determine whether they have been implemented.[13] (Ref: Para. A80)

145.           Existing paragraph 19 is amended to read as follows:

As required by ASA 330,17 the auditor shall design and perform tests to obtain sufficient appropriate audit evidence as to the operating effectiveness of relevant controls, if:

146.           Existing paragraph A8 is amended to read as follows:

Inherent risk factors are characteristics of conditions and events orand conditions that may affect the susceptibility of an assertion to misstatement, whether due to fraud or error, of an assertion about a class of transactions, account balance or disclosures, before consideration of controls.[32] Appendix 1 further explains the nature of 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