mary radford
TRANSCRIPT
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8/6/2019 Mary Radford
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HELPING THE NATION SPEND WISELY
International AuditingStandards
Mary Radford
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8/6/2019 Mary Radford
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HELPING THE NATION SPEND WISELY
International Auditing Standards
What we will cover:
Background
Key ISAs (UK and Ireland)
Changes and impact on external audit
Possible consequences for internal audit
and risk management
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Background
IAASB issues International Standards on
Auditing On going programme of ISA revision
EU 8Th
Directive will require memberstates to adopt ISAs
Will apply to the audit of all entities
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Background
Auditing Practices Board issues ISAs (UK
& Ireland) Based on IAASB ISAs but include
additional material
Will apply to all audits of financialstatements for commencing on or after
15th December 2004
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Background
Heads of public audit agencies have
formally adopted ISAs (UK and Ireland) INTOSAI has input to IAASB development
of ISAs
APB publishes sector specific guidance PN10
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Key ISAs (UK and I reland)
The most significant changes are contained in:
ISA 240 The Auditors Responsibility toConsider Fraud in an Audit of FinancialStatements
ISA 315 Obtaining an understanding of theEntity and its Environment and assessing theRisks of Material Misstatement
ISA 330 The Auditors Response toAssessed Risk
ISA 500 Audit Evidence
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ISA 240 The Auditors Responsibil ity toConsider Fraud in an Audit of Financial
Statements.
The ISA (UK and Ireland) requires the auditor to:
Discuss fraud risk and incidence with management andthose charged with governance.
Discuss within the engagement team how the financial
statements may be susceptible to material misstatementdue to fraud and what audit procedures would be mosteffective.
Consider whether one or more fraud factors risk factorsare present.
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ISA 240 The Auditors Responsibil ity toConsider Fraud in an Audit of Financial
Statements.The ISA (UK and Ireland) requires the auditor to:
Perform audit procedures to address the risk ofmanagement override of controls by testing journalentries, reviewing accounting estimates for bias, and
understanding the business rationale for significanttransactions outside the normal course of business.
Obtain specific representations from management
including its assessment of the risk of fraud Implications for money laundering reporting.
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ISA 315 Obtaining an Understanding of the Entityand its Environment and Assessing the R isks of
Material M isstatement
The auditor should obtain an understanding ofthe entity and its environment, including itsinternal control , sufficient to identify and assess
the risks of material misstatement of thefinancial statements whether they are due tofraud or error, and sufficient to design and
perform further audit procedures.
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ISA (UK and Ireland)315 Obtaining anUnderstanding of the Entity and its Environment
and Assessing the Risks of Material M isstatement
The ISA (UK and Ireland) requires the audit teamto:
Obtain, and document a broad understanding of theentity and its environment, including its processes for
identifying business risks relevant to financial reportingobjectives and its information systems and internalcontrol.
Discuss the susceptibility of the entitys financialstatements to material misstatement.
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ISA (UK and Ireland)330 The Auditor's
Response to Assessed Risk For each risk of material misstatement assessed
under ISA (UK and Ireland) 315, the ISArequires a response at two levels:
The Financial Statement level; and
The assertion level.
Audit documentation must link the assessed
risk to the evidence gathered.
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ISA 500 Audit Evidence
Introduces six new audit assertions.
ISA 500 places a different emphasis oncertain areas (e.g. disclosure) and auditteams will need to ensure that the audit
approach covers these areas. However auditors can express the
assertions differently, provided all are
covered.
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Practice Note 10 (Revised)
Sector specific guidance for the audit of
public sector entities To be applied by all auditors, not just
public audit agencies
Provides guidance on application of ISAsin public sector context, including the
audit of regularity
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Possible consequences for Internal
AuditThe impact of ISAs (UK and Ireland) oninternal audit will vary from client to client.However, there is increased motivation forthe external auditor to liaise with and rely
on the work of internal audit.Feedback from clients highlights the need
for the NAO to make maximum use of thework of internal audit.
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Possible consequences for Internal
Audit Key areas where external audit may rely
on the work of internal audit:- Documentation of control environment
- Review of internal control systems
- Consideration of the risk of fraud in thecontext of the financial statements
- Review of entitys own risk assessment
processes
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Possible consequences for risk
management/reporting Focus on controls design and fraud risk
Input to the assurance build
Approach to the audit committee/risk
committee Corporate Governance statements
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Other Sources of Information
ICAEW publication Auditing Standards
All Change!The following websites are also of use:
WWW.audit2005.com WWW.frc.org.uk/apb
WWW.ifac.org./iaasb
http://www.audit2005.com/http://www.frc.org.uk/apbhttp://www.frc.org.uk/apbhttp://www.audit2005.com/ -
8/6/2019 Mary Radford
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International Auditing Standards
Any questions?