| A119. | Significant risks often relate to significant non-routine transactions or judgmental matters. Non-routine transactions are transactions that are unusual, due to either size or nature, and that therefore occur infrequently. Judgmental matters may include the development of accounting estimates for which there is significant measurement uncertainty. Routine, non-complex transactions that are subject to systematic processing are less likely to give rise to significant risks. |
| A120. | Risks of material misstatement may be greater for significant non-routine transactions arising from matters such as the following: |
| Greater management intervention to specify the accounting treatment. |
| Greater manual intervention for data collection and processing. |
| Complex calculations or accounting principles. |
| The nature of non-routine transactions, which may make it difficult for the entity to implement effective controls over the risks. |
| A121. | Risks of material misstatement may be greater for significant judgmental matters that require the development of accounting estimates, arising from matters such as the following: |
| Accounting principles for accounting estimates or revenue recognition may be subject to differing interpretation. |
| Required judgment may be subjective or complex, or require assumptions about the effects of future events, for example, judgment about fair value. |
| A122. | ISA (UK and Ireland) 330 describes the consequences for further audit procedures of identifying a risk as significant.13 |
| 13 ISA (UK and Ireland) 330, paragraphs 15 and 21. |
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