Auditing and Assurance Standards and Guidance

Auditing Standards (Ireland)

FRC ISAs (UK and Ireland) applicable for periods beginning on or after 15 December 2010 but before 17 June 2016

ISA (UK and Ireland) 330 The auditor's responses to assessed risks

Application and Other Explanatory Material

Evaluating the Sufficiency and Appropriateness of Audit Evidence (Ref: Para. 25-27)

A60.

An audit of financial statements is a cumulative and iterative process. As the auditor performs planned audit procedures, the audit evidence obtained may cause the auditor to modify the nature, timing or extent of other planned audit procedures. Information may come to the auditor's attention that differs significantly from the information on which the risk assessment was based. For example:

The extent of misstatements that the auditor detects by performing substantive procedures may alter the auditor's judgment about the risk assessments and may indicate a significant deficiency in internal control.

The auditor may become aware of discrepancies in accounting records, or conflicting or missing evidence.

Analytical procedures performed at the overall review stage of the audit may indicate a previously unrecognized risk of material misstatement.

In such circumstances, the auditor may need to reevaluate the planned audit procedures, based on the revised consideration of assessed risks for all or some of the classes of transactions, account balances, or disclosures and related assertions. ISA (UK and Ireland) 315 contains further guidance on revising the auditor's risk assessment.7

A61.	The auditor cannot assume that an instance of fraud or error is an isolated occurrence. Therefore, the consideration of how the detection of a misstatement affects the assessed risks of material misstatement is important in determining whether the assessment remains appropriate.

A62.	The auditor's judgment as to what constitutes sufficient appropriate audit evidence is influenced by such factors as the following:

Significance of the potential misstatement in the assertion and the likelihood of its having a material effect, individually or aggregated with other potential misstatements, on the financial statements.

Effectiveness of management's responses and controls to address the risks.

Experience gained during previous audits with respect to similar potential misstatements.

Results of audit procedures performed, including whether such audit procedures identified specific instances of fraud or error.

Source and reliability of the available information.

Persuasiveness of the audit evidence.

Understanding of the entity and its environment, including the entity's internal control.

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