ISA 330 and Responses to Assessed Risks

Author:Martyn JONES

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Keywords:international audit standard, audit risk, material misstatement

Abstract:
In a previous article, Audit Risk, from the Perspective of the Clarified Audit Standards, published in issue no. 7, 2010 of „Financial Audit” journal, the author considered the importance of the concept of audit risk. The present article considers the requirements of ISA 330, The Auditor’s Responses to Assessed Risks. The main objective of ISA 330 is to give guidance on how auditors should obtain sufficient appropriate evidence regarding the assessed risks of material misstatement by designing and implementing appropriate responses to those risks. The readers should note that there are no significant differences between ISA 330 and the UK and Ireland version of this standard.\r\nAssessing risk lies at the core of the audit process and this article introduce and explain some of the terminology used by ISA 330, giving guidance to auditors on how to respond to assessed risks.\r\nIn general, tests of control are short, quick audit tests, whereas substantive procedures will require more detailed audit work. ISA 330 requires that, irrespective of the assessed risks of material misstatement, the auditor shall design and perform substantive procedures for each class of transactions, account balance and disclosure. Finally, the professional auditors should try to identify tests of control and substantive procedures for the main accounting systems.\r\n\r\n

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