and whether additional testing should Retain Para. 11 and Para. A57 of ISA now be performed because of the 500 that guides the auditor’s response potential misstatements and deviations. to identified inconsistencies in audit ISA 540 could include matters on how evidence, or doubts over the reliability to apply the guidance in ISA 200 of audit evidence. Further ISA 230 Paragraph 43 in the context of Para. 11 indicates that, for significant accounting estimates audit matters, when the auditor identifies information that is inconsistent with the auditor’s final conclusion, the auditor shall document how the inconsistency was addressed. ISA 540 could make reference to documenting how inconsistencies in audit evidence were addressed and the implications of deviations from controls where such controls are designed to address indicators of possible management bias and the auditor intends to rely on those controls ISA 540 could extend the requirement in Paragraph 23 to require the auditor to consider the effect of indicators of possible management bias in performing the auditor’s procedures and whether the auditor has obtained sufficient appropriate audit evidence when reaching conclusions about the results of those procedures How do we encourage it?: How do we encourage it?: Controls: Encourage through ISQC 1 as How do we encourage it?: Both: Through engagement team well as through the language in A43 of Both: Potentially through IQSC 1, in discussion, through supervision, ISA 200. particular via encouragement by “tone through proper training of team Substantive: Duplicate language from at the top”. Also, a link between ISA 330 members (industry, regulatory ISA 540 (ex. A80, A124) within ISA 315 Para. 17 and ISA 315 Para. 31. environment, etc.). and ISA 330 to be more general and applicable to the overall audit.
How do we encourage it?: Both: Through engagement team discussion, through supervision, through proper training of team members (industry, regulatory environment, etc.). and whether additional testing should now be performed because of the potential misstatements and deviations. ISA 540 could include matters on how to apply the guidance in ISA 200 Paragraph 43 in the context of accounting estimates How do we encourage it?: Controls: Encourage through ISQC 1 as well as through the language in A43 of ISA 200. Substantive: Duplicate language from ISA 540 (ex. A80, A124) within ISA 315 and ISA 330 to be more general and applicable to the overall audit. Retain Para. 11 and Para. A57 of ISA 500 that guides the auditor’s response to identified inconsistencies in audit evidence, or doubts over the reliability of audit evidence. Further ISA 230 Para. 11 indicates that, for significant audit matters, when the auditor identifies information that is inconsistent with the auditor’s final conclusion, the auditor shall document how the inconsistency was addressed. ISA 540 could make reference to documenting how inconsistencies in audit evidence were addressed and the implications of deviations from controls where such controls are designed to address indicators of possible management bias and the auditor intends to rely on those controls ISA 540 could extend the requirement in Paragraph 23 to require the auditor to consider the effect of indicators of possible management bias in performing the auditor’s procedures and whether the auditor has obtained sufficient appropriate audit evidence when reaching conclusions about the results of those procedures How do we encourage it?: Both: Potentially through IQSC 1, in particular via encouragement by “tone at the top”. Also, a link between ISA 330 Para. 17 and ISA 315 Para. 31.
20160621-IAASB-Agenda_Item_2-B-Professional_Skepticism_Matrix_0.docx