ISA 330 (Redrafted) DEALS with the auditor’s responsibility to DESIGN and IMPLEMENT responses to the risks of Material Misstatement identified and assessed by the ‘Auditor‘.
Table of Contents
- ISA 330 (Redrafted) – Introduction
- ISA 330 – Objective
- ISA 330 – Definitions
- ISA 330 – Requirements
- Synopsis
ISA 330 (Redrafted) – Introduction
1. Scope of this ISA
It deals with the auditor’s responsibility to design and implement responses to the risks of Material Misstatement IDENTIFIED and ASSESSED by the auditor in accordance with ISA 315 (Revised) in an ‘audit‘ of Financial Statements.
2. Effective Date
This ISA is EFFECTIVE for audits of financial statements for periods beginning on or after December 15, 2009.
ISA 330 – Objective
The Objective of the ‘Auditor’ is to obtain sufficient appropriate audit evidence regarding the assessed RISKS of Material Misstatement, through designing and implementing appropriate responses to those risks.
ISA 330 – Definitions
1. Substantive Procedure
An ‘Audit Procedure’ designed to DETECT Material Misstatements at the assertion level.
| Substantive Procedures Comprise: |
|---|
| (i) Test of details (of classes of transactions, account balances and disclosures); AND |
| (ii) Substantive analytical procedures. |
2. Test of Controls
An ‘Audit Procedure’ designed to EVALUATE the operating effectiveness of controls in preventing or detecting and correcting Material Misstatements at the assertion level.
ISA 330 – Requirements
1. Overall Responses
The ‘Auditor’ shall DESIGN and IMPLEMENT overall responses to address the assessed risks of Material Misstatement at the financial statement level.
2. Audit Procedures Responsive to the Assessed Risks of Material Misstatement at the Assertion Level
The ‘Auditor’ shall DESIGN and PERFORM further audit procedures whose nature, timing and extent are based on and are responsive to address the assessed risks of Material Misstatement at the assertion level.
2.1 Tests of Controls
The ‘Auditor’ shall DESIGN and PERFORM tests of controls to obtain sufficient appropriate audit evidence as to the operating effectiveness of relevant controls if:
- The Auditor’s Assessment Includes an expectation that controls are operating effectively; OR
- Substantive Procedures alone cannot provide sufficient appropriate audit evidence at the assertion level.
2.2 Substantive Procedures
Irrespective of the assessed risks of Material Misstatement, the auditor shall DESIGN and PERFORM substantive procedures for each Material class of transactions, account balances and disclosures.
The auditor shall CONSIDER whether ‘External Confirmation Procedures’ are to be performed as substantive audit procedures.
3. Adequacy of Presentation of the Financial Statements
The auditor shall PERFORM ‘Audit Procedures‘ to evaluate whether the overall presentation of the Financial Statements is in accordance with the applicable financial reporting framework.
4. Evaluating the Sufficiency and Appropriateness of Audit Evidence
The ‘Auditor’ shall CONCLUDE whether sufficient appropriate Audit Evidence has been obtained.
If the auditor has NOT obtained sufficient appropriate audit evidence as to a Material financial statement assertion, the auditor shall ATTEMPT to obtain further audit evidence.
5. Documentation
The ‘Auditor’ shall INCLUDE in the audit documentation:
- The overall responses to address the assessed risks at the financial statement level;
- The linkage of those procedures with the assessed risks at the assertion level; AND
- The results of the audit procedures.
Synopsis
ISA 330 ‘The Auditor’s Responses to Assessed Risks‘ DEALS with the auditor’s responsibility to design and implement responses to the risks of Material Misstatement identified and assessed by the auditor in accordance with ISA 315 (Revised) in an ‘Audit‘ of Financial Statements.
[300-499] Risk Assessment and Response to Assessed Risk
Chartered Accountant (Institute of Chartered Accountants of Pakistan)
Bachelor of Accounting Honours (Asia e University, Malaysia)