| A1. | Overall responses to address the assessed risks of material misstatement at the financial statement level may include: |
| Emphasizing to the audit team the need to maintain professional skepticism. |
| Assigning more experienced staff or those with special skills or using experts. |
| Providing more supervision. |
| Incorporating additional elements of unpredictability in the selection of further audit procedures to be performed. |
| Making general changes to the nature, timing, or extent of audit procedures, for example: performing substantive procedures at the period end instead of at an interim date; or modifying the nature of audit procedures to obtain more persuasive audit evidence. |
| A2. | The assessment of the risks of material misstatement at the financial statement level, and thereby the auditor's overall responses, is affected by the auditor's understanding of the control environment. An effective control environment may allow the auditor to have more confidence in internal control and the reliability of audit evidence generated internally within the entity and thus, for example, allow the auditor to conduct some audit procedures at an interim date rather than at the period end. Deficiencies in the control environment, however, have the opposite effect; for example, the auditor may respond to an ineffective control environment by: |
| Conducting more audit procedures as of the period end rather than at an interim date. |
| Obtaining more extensive audit evidence from substantive procedures. |
| Increasing the number of locations to be included in the audit scope. |
| A3. | Such considerations, therefore, have a significant bearing on the auditor's general approach, for example, an emphasis on substantive procedures (substantive approach), or an approach that uses tests of controls as well as substantive procedures (combined approach). |
 |
Licence and copyright | © 2018, LexisNexis Group a division of Reed Elsevier (UK) Ltd. All rights reserved. |