Document ID: chunk:federal_register_of_legislation:F2023C01130:body:0:p13
Version: federal_register_of_legislation:F2023C01130
Segment Type: other
Provision Reference: 
Character Range: 40285–43612

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.  If not, the auditor shall perform additional risk assessment procedures until audit evidence has been obtained to provide such a basis.  In identifying and assessing the risks of material misstatement, the auditor shall take into account all audit evidence obtained from the risk assessment procedures, whether corroborative or contradictory to assertions made by management.  (Ref: Para. A230–A232)

Classes of Transactions, Account Balances and Disclosures that Are Not Significant, but Which Are Material

36.               For material classes of transactions, account balances or disclosures that have not been determined to be significant classes of transactions, account balances or disclosures, the auditor shall evaluate whether the auditor's determination remains appropriate.  (Ref: Para. A233–A235)

Revision of Risk Assessment

37.               If the auditor obtains new information which is inconsistent with the audit evidence on which the auditor originally based the identification or assessments of the risks of material misstatement, the auditor shall revise the identification or assessment.  (Ref: Para. A236)

Documentation

38.               The auditor shall include in the audit documentation:[13] (Ref: Para. A237–A241)

(a)                The discussion among the engagement team and the significant decisions reached;

(b)                Key elements of the auditor's understanding in accordance with paragraphs 19, 21, 22, 24 and 25; the sources of information from which the auditor's understanding was obtained; and the risk assessment procedures performed;

(c)                The evaluation of the design of identified controls, and determination whether such controls have been implemented, in accordance with the requirements in paragraph 26; and

(d)                The identified and assessed risks of material misstatement at the financial report level and at the assertion level, including significant risks and risks for which substantive procedures alone cannot provide sufficient appropriate audit evidence, and the rationale for the significant judgements made.

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Application and Other Explanatory Material

Definitions (Ref: Para. 12)

Assertions (Ref: Para. 12(a))

A1.             Categories of assertions are used by auditors to consider the different types of potential misstatements that may occur when identifying, assessing and responding to the risks of material misstatement. Examples of these categories of assertions are described in paragraph A190. The assertions differ from the written representations required by ASA 580,[14] to confirm certain matters or support other audit evidence.

Controls (Ref: Para. 12(c))

A2.             Controls are embedded within the components of the entity's system of internal control.

A3.             Policies are implemented through the actions of personnel within the entity, or through the restraint of personnel from taking actions that would conflict with such policies.

A4.             Procedures may be mandated,