Document ID: chunk:federal_register_of_legislation:F2020L00252:body:0:p26
Version: federal_register_of_legislation:F2020L00252
Segment Type: other
Provision Reference: 
Character Range: 73093–76141

longer be a basis for continued reliance.  For example, changes in a system that enable an entity to receive a new report from the system probably do not affect the relevance of audit evidence from a previous audit; however, a change that causes data to be accumulated or calculated differently does affect it.

98.               Existing paragraph A38 is amended to read as follows:

In general, the higher the risk of material misstatement, or the greater the reliance on controls, the shorter the time period elapsed, if any, is likely to be.  Factors that may decrease the period for retesting a control, or result in not relying on audit evidence obtained in previous audits at all, include the following:

         …

           * A Ddeficiencyt in the entity's process to monitoring of the system of internal controls.

           * A significant manual element to the relevant controls.

…

99.               Existing paragraph A42 and the title are amended to read as follows:

Substantive Procedures (Ref: Para. 6, 18)

Paragraph 18 requires the auditor to design and perform substantive procedures for each material class of transactions, account balance, and disclosure, irrespective of the assessed risks of material misstatement.  For significant classes of transactions, account balances and disclosures, substantive procedures may have already been performed because paragraph 6 requires the auditor to design and perform further audit procedures that are responsive to the assessed risks of material misstatement at the assertion level. Accordingly, substantive procedures are required to be designed and performed in accordance with paragraph 18:

           * When the further audit procedures for significant classes of transactions, account balances or disclosures, designed and performed in accordance with paragraph 6, did not include substantive procedures; or

           * For each class of transactions, account balance or disclosure that is not a significant class of transactions, account balance or disclosure, but that has been identified as material in accordance with ASA 315.[7]

           * This requirement reflects the facts that: (a) the auditor's assessment of risk is judgemental and so may not identify all risks of material misstatement; and (b) there are inherent limitations to internal controls, including management override.

100.           The following paragraph A45 is inserted following existing paragraph A42 of this Auditing Standard:

Not all assertions within a material class of transactions, account balance or disclosure are required to be tested. Rather, in designing the substantive procedures to be performed, the auditor's consideration of the assertion(s) in which, if a misstatement were to occur, there is a reasonable possibility of the misstatement  being material, may assist in identifying the appropriate nature, timing and extent of the procedures to be performed.

101.           Existing paragraph A45 is amended to read as follows:

The nature assessment of the risk and or