This site uses cookies to provide you with a more responsive and personalised service. By using this site you agree to our use of cookies. Please read our cookie notice (http://www2.deloitte.com/ca/en/legal/cookies.html) for more information on the cookies we use and how to delete or block them.
The full functionality of our site is not supported on your browser version, or you may have 'compatibility mode' selected. Please turn off compatibility mode, upgrade your browser to at least Internet Explorer 9, or try using another browser such as Google Chrome or Mozilla Firefox.

AASB Response – Identifying and Assessing the Risks of Material Misstatement

  • AASB Image

Nov 02, 2018

On November 2, 2018, the Auditing and Assurance Standards Board (AASB) submitted a comment letter responding to the IAASB’s Exposure Draft, Proposed International Standard on Auditing 315 (Revised), Identifying and Assessing the Risks of Material Misstatement.

Overall, the AASB agrees that the proposed changes are an improvement over the extant ISA, and that the changes bring clarity to many issues, such as how the understanding of the entity, its applicable financial reporting framework, and the system of internal control drive consideration of the risks of material misstatement.

They believe, however, that for ED-315 to promote a more consistent process for the identification and assessment of the risks of material misstatement, further improvements are needed. The results of field testing showed that many Canadian practitioners had significantly different interpretations of certain aspects of the proposals. In particular, they are concerned about the following:

  • Understanding versus evaluating the design of components of internal control
  • Controls relevant to the audit in accordance with paragraph 39(e)
  • Lack of clarity in the “information system and communication” component of internal control (paragraphs 35-36)
  • Significant risks and the reference to magnitude “AND” likelihood
  • Stand-back requirements

Review the AASB's response on the IAASB's website.

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.