Guide to Using International Standards on Auditing in - IFAC

17.03.2014 Views
134 ong>Guideong> ong>toong> ong>Usingong> ong>Internationalong> ong>Standardsong> on Auditing in the Audits of Small- and Medium-Sized Entities Volume 1—Core Concepts Paragraph # Relevant Extracts from ISAs 330.14 If the audiong>toong>r plans ong>toong> use audit evidence from a previous audit about the operating effectiveness of specific controls, the audiong>toong>r shall establish the continuing relevance of that evidence by obtaining audit evidence about whether significant changes in those controls have occurred subsequent ong>toong> the previous audit. The audiong>toong>r shall obtain this evidence by performing inquiry combined with observation or inspection, ong>toong> confirm the understanding of those specific controls, and: (a) If there have been changes that affect the continuing relevance of the audit evidence from the previous audit, the audiong>toong>r shall test the controls in the current audit. (Ref: Para. A36) (b) If there have not been such changes, the audiong>toong>r shall test the controls at least once in every third audit, and shall test some controls each audit ong>toong> avoid the possibility of testing all the controls on which the audiong>toong>r intends ong>toong> rely in a single audit period with no testing of controls in the subsequent two audit periods. (Ref: Para. A37-A39) 330.29 If the audiong>toong>r plans ong>toong> use audit evidence about the operating effectiveness of controls obtained in previous audits, the audiong>toong>r shall include in the audit documentation the conclusions reached about relying on such controls that were tested in a previous audit. Rotational Testing of Controls Assuming that the facong>toong>rs outlined in the exhibit below do not apply, it is possible that the tests of operating effectiveness of internal controls may only need ong>toong> be performed once every third audit. The actual period of reliance will be based on professional judgment, but cannot exceed two years. Facong>toong>rs that would rule out the use of rotational testing are outlined below. Exhibit 10.5-6 Use of control testing performed in prior years is NOT permitted when: Reliance on the control is required ong>toong> mitigate a “significant risk”; The operation of the internal control has changed during the period, or the risk being mitigated by the control has changed; A weak control environment exists; The ongoing moniong>toong>ring of internal control operation is poor; There is a significant manual element ong>toong> the operation of relevant controls; Personnel changes have occurred that significantly affect the application of the control; Changing circumstances indicate the need for changes in the operation of the control; and/or General IT controls are weak or ineffective. Before audit evidence obtained in prior audits can be used, the continuing relevance of such evidence needs ong>toong> be established each period. This will include confirming the understanding of those specific controls through: • Inquiry of management and others about changes; and • Observation or inspection of the internal control ong>toong> determine its continuing implementation.

135 ong>Guideong> ong>toong> ong>Usingong> ong>Internationalong> ong>Standardsong> on Auditing in the Audits of Small- and Medium-Sized Entities Volume 1—Core Concepts When there are a number of controls where evidence could be used from prior audits, the reliance should be staggered so that some testing of internal control is performed during each audit. Testing at least a few controls each period also provides collateral evidence about the continuing effectiveness of the control environment. In general, the higher the risks of material misstatement or the greater the reliance placed on internal control, the shorter the time period should be between tests of controls.

Page 1 and 2: Guide to</

Page 3 and 4: 3 Guide to


Page 7 and 8: Disclaimer This Guide</stro


Page 11 and 12: 11 Guide t

Page 13 and 14: 13 2. Clarified ISAs In March 2009,



Page 19 and 20: Volume 1 Core Concepts
















Page 51 and 52: 51 5. Internal Control — Purpose













Page 77 and 78: 77 6. Financial Statement Assertion












Page 101 and 102: 101 Guide







Page 115 and 116: 115 10. Further Audit Procedures Ch









Page 133: 133 Guide





Page 145 and 146: 145 12. Related Parties Chapter Con








Page 161 and 162: 161 14. Going Concern Chapter Conte





Page 171 and 172: 171 15. Summary of Other ISA Requir

















Page 205 and 206: 205 16. Audit Documentation Chapter
















audit

auditor

procedures

statements

controls

relevant

entities

auditing

volume

audits

ifac

www.kacr.cz

Guide to Using International Standards on Auditing in - IFAC

Guide to Using International Standards on Auditing in - IFAC ... View more Guide to Using International Standards on Auditing in - IFAC

Delete template?

Save as template ?

Guide to Using International Standards on Auditing in - IFAC Guide to Using International Standards on Auditing in - IFAC