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13 Mar. 2020

AUASB issues revised ASA 315 Identifying and Assessing the Risks of Material Misstatement

The AUASB has released the revised ASA 315 Identifying and Assessing the Risks of Material Misstatement with the operative date being for financial reporting periods commencing on or after 15 December 2021.  Early adoption is permitted prior to this date. 

Refer to the ASA 315 Basis for Conclusions which provides an overview of the background and rationale for the development and approval of ASA 315.

The AUASB have released revised ASA 315 to reflect revisions made by the International Auditing and Assurance Standards Board to ISA 315.  ISA 315 is an important part of the IAASB’s efforts to improve audit quality by encouraging a more consistent and robust risk assessment to drive an appropriate and effective response to those risks.  The IAASB had the following objective when updating ISA 315:

  • To establish more robust requirements and appropriately detailed guidance to drive auditors to perform appropriate risk assessment procedures in a manner commensurate with the size and nature of the entity.  It was anticipated that these revisions would focus on enhancing the auditor’s approach to understanding the entity, its environment (including its internal control) and risk assessment activities in light of the changing environment.
  • To determine whether and how its organisation and structure could be modified to promote a more effective risk assessment.
  • To determine what non-authoritative guidance and support tools should be developed thereby aiding its effective implementation, in particular to address concerns by auditors of small to medium sized entities.

ASA 315 contains a number of significant changes from the existing standard, and will impact all audit engagements. 

Implementation support

To support auditors in the adoption of ASA 315 Introduction to ISA 315  is now available which provides an overview of the standard and the significant changes.  The IAASB will provide additional support materials which are detailed in their implementation plan.  The AUASB are also committed to support auditors in the adoption of ASA 315 and will provide additional support materials where considered necessary.