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Identifying and Assessing the Risks of Material Misstatement [Completed]

Effective date:

ISA 315 (Revised 2019) becomes effective for financial statement audits for periods beginning on or after December 15, 2021.

Included in the CPA Canada Handbook – Assurance:

The AASB expects that the 2019 revisions to CAS 315 will be included in a CPA Canada Handbook – Assurance update in May 2020

Last up­dated:

December 2019


ISA 315 (Revised) deals with the auditor’s responsibility to identify and assess the risks of material misstatement in the financial statements, through understanding the entity and its environment, including the entity’s internal control.

Initial activities of the IAASB’s project will focus on: (i) the potential objectives and scope of a possible project to address the issues that have been identified by the ISA Implementation Monitoring project; and (ii) possible changes that may be necessary to ISA 315 (Revised) to enhance the requirements and guidance for evolving environmental influences (such as changing internal control frameworks and more advanced technology systems being utilized by both management and auditors).

In early 2016 the IAASB established a working group to explore issues with respect to ISA 315 (Revised) and since then the ISA 315 (Revised) Working Group has started its initial outreach activities.

In July 2018, the IAASB issued for public comment an Exposure Draft of proposed revisions to ISA 315 (Revised), Identifying and Assessing the Risks of Material Misstatement, in order to advance audit quality. The IAASB is proposing more robust requirements and improved guidance to: (i) drive consistent and effective identification and assessment of risks of material misstatement; (ii) modernize ISA 315 to meet evolving business needs, including information technology, and how auditors use automated tools and techniques, including data analytics, to perform audit procedures; (iii) improve the standard’s applicability to entities across a wide spectrum of circumstances and complexities; and (iv) focus auditors on exercising professional skepticism throughout the risk identification and assessment process.

In the event that the IAASB amends ISA 315, the AASB is obligated to make similar changes to CAS 315.


Other developments

December 2019

On December 19, 2019, the IAASB released International Standard on Auditing (ISA) 315 (Revised 2019), its revised standard for identifying and assessing risks of material misstatement.

July 2019

In July 2019, the AASB staff updated this project to note that the Board expects to finalize the Handbook material in Q1/2020.

January 2019

On January 31, 2019, the AASB issued a supplement to the September 2018 Exposure Draft, “Identifying and Assessing the Risks of Material Misstatement” (ED-CAS 315), to explain and illustrate the proposed conforming amendments to revised CAS 540, and paragraph A42 of CAS 200, arising from ED-CAS 315. Comments are requested by May 1, 2019.

September 2018

On September 6, 2018, the AASB issued an Exposure Draft proposing the adoption of ISA 315 (Revised), with appropriate Canadian amendments, if any. Stakeholders are invited to comment until November 2, 2018.

July 2018

On July 16, 2018, the IAASB issued for public comment an Exposure Draft of proposed revisions to ISA 315 (Revised).  Comments are requested by November 2, 2018.

June 2018

In June 2018, the AASB staff updated this project to indicate that the AASB expects to issue an exposure draft in Q4/2018.

November 2017

In November 2017, the AASB staff updated this project to indicate that the AASB expects to issue an Exposure Draft for comment in Q3/2018.

October 2016

In October 2016, the AASB staff updated this project to advise that the AASB expects to issue an Exposure Draft in respect of this project in Q1/2018.

July 2016

On July 21, 2016, CPA Canada issued an article written by Eric Turner, Director, Auditing and Assurance Standards of CPA Canada, alerting readers to the fact that the IAASB is currently reviewing ISA 315 and the audit risk model with a view to making a number of improvements.


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