| 6. | The auditor shall design and perform further audit procedures whose nature, timing, and extent are based on and are responsive to the assessed risks of material misstatement at the assertion level. (Ref: Para. A4-A8) |
| 7. | In designing the further audit procedures to be performed, the auditor shall: |
| (a) | Consider the reasons for the assessment given to the risk of material misstatement at the assertion level for each class of transactions, account balance, and disclosure, including: |
| (i) | The likelihood of material misstatement due to the particular characteristics of the relevant class of transactions, account balance, or disclosure (that is, the inherent risk); and |
| (ii) | Whether the risk assessment takes account of relevant controls that is, the control risk), thereby requiring the auditor to obtain audit evidence to determine whether the controls are operating effectively (that is, the auditor intends to rely on the operating effectiveness of controls in determining the nature, timing and extent of substantive procedures); and (Ref: Para. A9-A18) |
| (b) | Obtain more persuasive audit evidence the higher the auditor's assessment of risk. (Ref: Para. A19) |
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