Project Stages
Board Papers
March 2016 June 2016
CAG Papers
March 2016
Board Minutes
March 2016 June 2016
CAG Minutes
March 2016
Summary
In early 2016, the IAASB established a working group (WG) to explore issues with respect to ISA 315 (Revised). The WG commenced its work in early March 2016, which included consideration of the results of the IAASB's Post-Implementation Review of the Clarified ISAs and outreach activities to identify issues involving ISA 315 (Revised) to further inform its preliminary thinking. These outreach activities included leadership of the WG and staff discussions with representatives of the International Federation of Accountants (IFAC) Small and Medium Practices (SMP) Committee, the International Forum of Independent Audit Regulators’ (IFIAR) Standards Coordination Working Group (SCWG) and the Institute of Chartered Accountants of England and Wales (ICAEW). The consideration of the results of the IAASB's Post-Implementation Review of the Clarified ISA, the results of outreach activities, the input received at the March 2016 and June 2016 IAASB meetings and the March 2016 IAASB Consultative Advisory Group (CAG) meeting, and the WG’s discussions to date, have informed the WG’s thinking through the information gathering stage of the project.
Board Papers
September 2016
CAG Papers
September 2016
Issued Document
Project Proposal
Board Minutes
September 2016
CAG Minutes
September 2016
Summary
The IAASB approved a project proposal to revise ISA 315 (Revised). Consistent with the Board’s discussions at its September 2016 meeting, the IAASB believes a revision of ISA 315 (Revised) is necessary to revise and enhance specific requirements and revise and develop application material, and develop other non-authoritative guidance, to respond to the issues and concerns raised. Such revisions and enhancements will address matters such as the need for ISA 315 (Revised) to:
(a) Not only reflect the current business and audit environment, but also be sufficiently adaptable to deal with the rapidly changing business and audit environment (in particular the increased use of technology);
(b) Be more effectively applied by auditors in the private and public sectors applying the standard in audits of entities of various sizes;
(c) Set an enhanced foundation for other standards that have more specific risk assessment requirements (such as ISA 540 and ISA 600); and
(d) Enhance the application of professional skepticism by auditors in framing their judgments when performing risk assessment procedures.
While revisions to ISA 315 (Revised) are clearly necessary, feedback has also indicated that more support (such as the development of non-authoritative guidance) would be helpful to achieve the intended objectives of this project. The IAASB will firstly seek to revise and enhance the requirements so that they are robust, yet sufficiently flexible, to drive appropriate risk assessments. The IAASB will also revise and develop appropriate application and other explanatory material to be included in the revised standard. The IAASB recognizes that more specific guidance in particular circumstances (that would not be appropriate to include in a standard intended to apply to audits of all sizes) may be necessary (to be developed by the IAASB or by others (such as national auditing standard setters)). This could include, for example, guidance on using data analytics in performing risk assessments and illustrative examples of how the risk-based approach to the ISAs could be applied to audits of smaller entities. The development of additional guidance is expected to help with the implementation of the standard and will therefore help drive audit quality, which is in the public interest.
Board Papers
December 2016 March 2017 September 2017 October 2017 December 2017 March 2018 May 2018 June 2018 July 2018
CAG Papers
March 2017 September 2017 March 2018 September 2018
Issued Document
Proposed International Standard on Auditing 315 (Revised), Identifying and Assessing the Risk of Material Misstatement
Board Minutes
December 2016 March 2017 September 2017 October 2017 December 2017 March 2018 May 2018 June 2018 July 2018
CAG Minutes
March 2017 September 2017 March 2018 September 2018
Other
ISA 315 (Revised) - Key Issues Explained ISA 315 (Revised) - Questions and Answers
Responses
Comment Letters
Summary
Meeting Highlights - June 2018
After making amendments in response to the Board’s comments received during the meeting, the Board approved the ISA 315 (Revised), Identifying and Assessing the Risk of Material Misstatement, Exposure Draft (ED) for public exposure. The ED will be issued in mid-July for comment by November 2, 2018. In finalizing the ED, the Board continued to express concern about the complexity and scalability of the standard, in particular that the linear approach to the standard (including the flowcharts) did not illustrate the iterative nature of the standard. On balance, however, the Board agreed that stakeholder views were needed to determine whether the proposals could be effectively implemented. The Board also discussed how scalability was presented, in particular how the term ‘smaller and less complex’ was used to highlight these aspects.
The Board also asked for further clarification of the required evaluation of the design of the ‘information system relevant to financial reporting,’ to better distinguish this requirement from the understanding of the control activities component. The Board further supported the Task Force’s recommendation to include a specific question in the Explanatory Memorandum on the stand-back requirement (in conjunction with the requirement of ISA 330, The Auditor’s Responses to Assessed Risks, paragraph 18), because of mixed views relating to whether this requirement was needed.
The conforming amendments to ISA 540 (Revised) arising from the ISA 315 (Revised) ED were approved by the IAASB on July 17, 2018.
Board Papers
December 2018 March 2019 June 2019 September 2019
Board Minutes
December 2018 March 2019 June 2019
CAG Papers
March 2019 September 2019
CAG Minutes
March 2019
Summary
MEETING HIGHLIGHTS - SEPTEMBER 2019
The Board approved the revisions to ISA 315 (Revised), as well as the related conforming amendments. The revised ISA will be effective for audits of financial statements for periods beginning on or after December 15, 2021. Once the Public Interest Oversight Board’s (PIOB) confirmation that due process was followed is received, the Board will formally release the standard.
In finalizing ISA 315 (Revised), the Board continued to focus on the understandability and complexity of the ISA, as well as the iterative nature of the standard. The Board continued to discuss the threshold for identifying risks of material misstatement and agreed the supporting guidance for this as a conforming amendment to ISA 200.
The Board has also recognized that support for those initially applying the changes to ISA 315 (Revised) is critical and will further consider the most appropriate actions in providing this initial support. The Board also acknowledged the need to monitor implementation challenges as they arise.
