Document ID: chunk:federal_register_of_legislation:F2022C01152:reg:4:p7
Version: federal_register_of_legislation:F2022C01152
Segment Type: reg
Provision Reference: reg 4 (pt 7/63)
Character Range: 31106–34244

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 address that risk,[12] and evaluate whether such controls have been designed effectively, and determine whether they have been implemented.[13] (Ref: Para. A80)

Responses to the Assessed Risks of Material Misstatement

18.               As required by ASA 330,[14] the auditor's further audit procedures shall be responsive to the assessed risks of material misstatement at the assertion level,[15] considering the reasons for the assessment given to those risks. The auditor's further audit procedures shall include one or more of the following approaches:

(a)                Obtaining audit evidence from events occurring up to the date of the auditor's report (see paragraph 21);

(b)                Testing how management made the accounting estimate (see paragraphs 22–27); or

(c)                Developing an auditor's point estimate or range (see paragraphs 28–29).

The auditor's further audit procedures shall take into account that the higher the assessed risk of material misstatement, the more persuasive the audit evidence needs to be.[16] The auditor shall design and perform further audit procedures in a manner that is not biased towards obtaining audit evidence that may be corroborative or towards excluding audit evidence that may be contradictory. (Ref: Para. A81–A84)

19.               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 controls, if:

(a)                The auditor's assessment of risks of material misstatement at the assertion level includes an expectation that the controls are operating effectively, or

(b)                Substantive procedures alone cannot provide sufficient appropriate audit evidence at the assertion level.

In relation to accounting estimates, the auditor's tests of such controls shall be responsive to the reasons for the assessment given to the risks of material misstatement. In designing and performing tests of controls, the auditor shall obtain more persuasive audit evidence the greater the reliance the auditor places on the effectiveness of a control.[18] (Ref: Para. A85–A89)

20.               For a significant risk relating to an accounting estimate, the auditor's further audit procedures shall include tests of controls in the current period if the auditor plans to rely on those controls. When the approach to a significant risk consists only of substantive procedures, those procedures shall include tests of details.[19] (Ref: Para. A90)

Obtaining Audit Evidence from Events Occurring up to the Date of the Auditor's Report

21.               When the auditor's further audit procedures include obtaining audit evidence from events occurring up to the date of the auditor's report, the auditor shall evaluate whether such audit evidence is sufficient and appropriate to address