10AU-C 315 Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement
Step 1. Perform Risk Assessment Procedures
Step 2. Identification of Significant Risks
Step 3. Assessing the Risk of Material Misstatement
Examples of Matters to Consider When Obtaining an Understanding of the Entity and Its Environment
The Client’s Business: New Client
The Client’s Business: Continuing Client
Using a Risk-Based, Top-Down Approach to Evaluate Internal Control
SCOPE
AU-C 315 provides guidance for the auditor to identify and assess the risks of material misstatements. The auditor does this by achieving an understanding the entity and its environment, including internal control. (AU-C 315.01)
TECHNICAL ALERT
Through the AICPA’s initiative on Enhancing Audit Quality (EAQ), data surfaced that indicated firms often fail to perform appropriate risk assessments and link those risk assessments to their audit procedures in compliance with AU-C Section 315 and AU-C Section 330. As a result, the AICPA Peer Review Board has developed stronger, more precise guidance. The Peer Review Board in its September 2018 Alert, as clarified in October 2018, announced an updated focus on risk assessment documentation and a new section in the Peer Review Manual, Evaluation of Non-Compliance ...
Get Wiley Practitioner's Guide to GAAS 2020 now with the O’Reilly learning platform.
O’Reilly members experience books, live events, courses curated by job role, and more from O’Reilly and nearly 200 top publishers.
