Auditing Standard ASA 315 Identifying and Assessing the ...

1 ASA 315 (February 2020) Auditing Standard ASA 315 Identifying and Assessing the risks of material misstatement Issued by the Auditing and Assurance standards Board Authorised Version F2020L00234 registered 06/03/2020 ASA 315 - 2 - Auditing Standard Obtaining a Copy of this Auditing Standard This Auditing Standard is available on the Auditing and Assurance standards Board (AUASB) website: Contact Details Auditing and Assurance standards Board Podium Level 14, 530 Collins Street Melbourne Victoria 3000 AUSTRALIA Phone: (03) 8080 7400 E-mail: Postal Address: PO Box 204, Collins Street West Melbourne Victoria 8007 AUSTRALIA COPYRIGHT 2020 Commonwealth of Australia.

2 The text, graphics and layout of this Auditing Standard are protected by Australian copyright law and the comparable law of other countries. Reproduction within Australia in unaltered form (retaining this notice) is permitted for personal and non-commercial use subject to the inclusion of an acknowledgment of the source as being the Australian Auditing and Assurance standards Board (AUASB). Requests and enquiries concerning reproduction and rights for commercial purposes within Australia should be addressed to the Technical Director, Auditing and Assurance standards Board, PO Box 204, Collins Street West, Melbourne, Victoria 8007 or sent to Otherwise, no part of this Auditing Standard may be reproduced, stored or transmitted in any form or by any means without the prior written permission of the AUASB except as permitted by law.

3 This Auditing Standard reproduces substantial parts of the corresponding International Standard on Auditing issued by the International Auditing and Assurance standards Board (IAASB) and published by the International Federation of Accountants (IFAC), in the manner described in the statement on Conformity with International standards on Auditing . The AUASB acknowledges that IFAC is the owner of copyright in the International Standard on Auditing incorporated in this Auditing Standard throughout the world. All existing rights in this material are reserved outside Australia.

4 Reproduction outside Australia in unaltered form (retaining this notice) is permitted for personal and non-commercial use only. Further information and requests for authorisation to reproduce this Auditing Standard for commercial purposes outside Australia should be addressed to the Technical Director, Auditing and Assurance standards Board, PO Box 204, Collins Street West, Melbourne, Victoria 8007 or sent to Any decision to approve a request may also require the agreement of IFAC. ISSN 1833-4393 Authorised Version F2020L00234 registered 06/03/2020 Auditing Standard ASA 315 Identifying and Assessing the risks of material misstatement ASA 315 - 3 - Auditing Standard CONTENTS PREFACE AUTHORITY STATEMENT CONFORMITY WITH INTERNATIONAL standards ON Auditing Paragraphs Application.

5 Aus Operative Date .. Aus Introduction Scope of this Auditing Standard .. 1 Key Concepts in this 2-8 Scalability .. 9 Effective Date .. 10 Objective .. 11 Definition .. 12 Requirements Risk Assessment Procedures and Related Activities .. 13-18 Obtaining an Understanding of the Entity and Its Environment, the Applicable Financial Reporting Framework and the Entity s System of Internal Control .. 19-27 Identifying and Assessing the risks of material misstatement .. 28-37 Documentation .. 38 Application and Other Explanatory material Definitions ..A1-A10 Risk Assessment Procedures and Related Activities.

6 A11-A47 Obtaining an Understanding of the Entity and Its Environment, the Applicable Financial Reporting Framework and the Entity s System of Internal Control ..A48-A183 Identifying and Assessing the risks of material misstatement ..A184-A236 Documentation ..A237-A241 Appendix 1: Considerations for Understanding the Entity and its Business Model Appendix 2: Understanding Inherent Risk Factors Appendix 3: Understanding the Entity s System of Internal Control Appendix 4: Considerations for Understanding an Entity s Internal audit Function Appendix 5: Considerations for Understanding Information Technology (IT) Appendix 6.

7 Considerations for Understanding General IT Controls Authorised Version F2020L00234 registered 06/03/2020 Auditing Standard ASA 315 Identifying and Assessing the risks of material misstatement ASA 315 - 4 - Auditing Standard PREFACE Reasons for Issuing ASA 315 The AUASB issues Auditing Standard ASA 315 Identifying and Assessing the risks of material misstatement pursuant to the requirements of the legislative provisions and the Strategic Direction explained below. The AUASB is a Non Corporate Commonwealth entity of the Australian Government established under section 227A of the Australian Securities and Investments Commission Act 2001, as amended (ASIC Act).

8 Under section 336 of the Corporations Act 2001, the AUASB may make Auditing standards for the purposes of the corporations legislation. These Auditing standards are legislative instruments under the Legislation Act 2003. Under the Strategic Direction given to the AUASB by the Financial Reporting Council (FRC), the AUASB is required, inter alia, to develop Auditing standards that have a clear public interest focus and are of the highest quality. Main Features This Auditing Standard represents the Australian equivalent of ISA 315 (Revised 2019), Identifying and Assessing the risks of material misstatement and will replace the current ASA 315 issued by the AUASB in December 2015 (as amended).

9 This Auditing Standard contains no differences from the reissued ISA 315 (Revised 2019). Authorised Version F2020L00234 registered 06/03/2020 Auditing Standard ASA 315 Identifying and Assessing the risks of material misstatement ASA 315 - 5 - Auditing Standard AUTHORITY STATEMENT The Auditing and Assurance standards Board (AUASB) makes this Auditing Standard ASA 315 Identifying and Assessing the risks of material misstatement pursuant to section 227B of the Australian Securities and Investments Commission Act 2001 and section 336 of the Corporations Act 2001. This Auditing Standard is to be read in conjunction with ASA 101 Preamble to Australian Auditing standards , which sets out the intentions of the AUASB on how the Australian Auditing standards , operative for financial reporting periods commencing on or after 1 January 2010, are to be understood, interpreted and applied.

10 This Auditing Standard is to be read also in conjunction with ASA 200 Overall Objectives of the Independent Auditor and the Conduct of an audit in Accordance with Australian Auditing standards . Dated: 4 February 2020 R Simnett AO Chair - AUASB Authorised Version F2020L00234 registered 06/03/2020 Auditing Standard ASA 315 Identifying and Assessing the risks of material misstatement ASA 315 - 6 - Auditing Standard Conformity with International standards on Auditing This Auditing Standard conforms with International Standard on Auditing ISA 315 (Revised 2019) Identifying and Assessing the risks of material misstatement issued by the International Auditing and Assurance standards Board (IAASB)