At its meeting on December 5-9, 2016, the IAASB considered recommendations from the ISA 315 (Revised) Task Force related to identification and assessment of inherent risks (including a spectrum of inherent risks and significant risks), understanding of internal control (including initial views on how the existing requirements are able to be applied to a wide range of circumstances) and other matters. The IAASB supported many of the recommendations from the ISA 315 (Revised) Task Force. In expressing its support, the Board requested that further clarity be provided on how certain recommendations would be operationalized. The IAASB also discussed the option to perform a separate or combined assessment of inherent risk and control risk is retained, whether similar requirements exist in the Public Company’s Accounting Oversight Board’s standards to what the ISA 315 (Revised) Task Force is recommending, and the merits of in introducing “susceptibility to fraud” as a fifth qualitative inherent risk factor and related to spectrum of inherent risks. The IAASB also concluded that it would not be appropriate to have defined categories in the standard, other than what exists today (i.e., significant risks and risks that are at an acceptably low level).

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At its meeting on December 5-9, 2016, the IAASB discussed the ISA 540 Task Force’s (ISA 540 TF) proposals relating to the revision of ISA 540. The IAASB supported the ISA 540 TF’s proposal to focus the work effort on the objectives to be achieved by the auditor. The IAASB also discussed other aspects of the project, including a proposed consequential amendment to ISA 500 related to external information sources and a possible requirement on when testing the operating effectiveness of controls would be required when auditing accounting estimates. While recognizing that the subject matter is complex, the ISA 540 TF was asked to simplify and clarify the material to the extent possible. An Exposure Draft of proposed revised ISA 540 is intended to be presented to the IAASB for approval in March 2017.

Review the summary and the Highlight Summary on the IAASB's Web site.

At its meeting on December 5-9, 2016, the IAASB approved, subsequent to certain revisions, the project proposal to address the revision of ISQC 1, ISA 220 and ISA 600. The project proposal combines the topics of group audits and quality control due to the interaction and extent of crossover of the issues affecting these topics, while the timing of the projects takes into account the degree of interactions between the various projects of the IAASB. The project proposal specifically takes into consideration the proportionality and scalability of the standards, given the particular challenges of small- and medium sized practices (SMPs) and audits of small- and medium sized entities (SMEs). The IAASB also discussed the following specific components of the project, namely (i) Quality Control (Firm Level) re ISQC 1; (ii) Quality Control – Engagement Quality Control Review (EQCR); (iii)  Quality Control (Engagement Level); and (iv) Professional Skepticism.

Review the summary and the Highlight Summary on the IAASB's Web site.