Auditing Standard ASA 315 Identifying and Assessing the ...

1 compiled Auditing Standard ASA 315 (December 2015) Auditing Standard ASA 315 Identifying and Assessing the Risks of material misstatement through understanding the entity and Its Environment This compilation was prepared on 1 December 2015 taking into account amendments made by ASA 2011-1, ASA 2013-2 and ASA 2015-1 Prepared by the Auditing and Assurance standards Board ASA 315 - compiled - 2 - Auditing Standard Obtaining a Copy of this Auditing Standard The most recently compiled versions of Auditing standards , original standards and amending standards (see Compilation Details) are available on the AUASB website: Contact Details Auditing and Assurance standards Board Podium Level 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 2015 Commonwealth of Australia. The text, graphics and layout of this Auditing Standard are protected by Australian copyright law and the comparable law of other countries.

2 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 Executive 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. 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 .

3 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. 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 Executive 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 Auditing Standard ASA 315 Identifying and Assessing the Risks of material misstatement through understanding the entity and Its Environment ASA 315 - compiled - 3 - Auditing Standard CONTENTS COMPILATION DETAILS AUTHORITY STATEMENT CONFORMITY WITH INTERNATIONAL standards ON Auditing Paragraphs Application.

4 Aus Operative Date .. Aus Introduction Scope of this Auditing Standard .. 1 Effective Date .. 2 Objective .. 3 Definitions .. 4 Requirements Risk Assessment Procedures and Related Activities .. 5-10 The Required understanding of the entity and its Environment, Including the entity s Internal Control .. 11-24 Identifying and Assessing the Risks of material misstatement .. 25-31 Documentation .. 32 Application and Other Explanatory material Risk Assessment Procedures and Related Activities ..A1-A24 The Required understanding of the entity and Its Environment, Including the entity s Internal Control ..A25-A121 Identifying and Assessing the Risks of material misstatement ..A122-A151 Documentation ..A152-A155 Appendix 1: Internal Control Components Appendix 2: Conditions and Events That May Indicate Risks of material misstatement Auditing Standard ASA 315 Identifying and Assessing the Risks of material misstatement through understanding the entity and Its Environment ASA 315 - compiled - 4 - Auditing Standard COMPILATION DETAILS Auditing Standard ASA 315 Identifying and Assessing the Risks of material misstatement through understanding the entity and Its Environment (as Amended) This compilation takes into account amendments made up to and including 1 December 2015 and was prepared on 1 December 2015 by the Auditing and Assurance standards Board (AUASB).

5 This compilation is not a separate Auditing Standard made by the AUASB. Instead, it is a representation of ASA 315 (October 2009) as amended by other Auditing standards which are listed in the Table below. Table of standards Standard Date made Operative Date ASA 315 [A] 27 October 2009 Financial reporting periods commencing on or after 1 January 2010 ASA 2011-1 [B] 27 June 2011 Financial reporting periods commencing on or after 1 July 2011 ASA 2013-2 [C] 11 November 2013 Financial reporting periods commencing on or after 1 January 2014 ASA 2015-1 [D] 1 December 2015 Financial reporting periods ending on or after 15 December 2016 [A] Federal Register of Legislative Instruments registration number F2009L04079, 12 November 2009 [B] Federal Register of Legislative Instruments registration number F2011L01379, 30 June 2011 [C] Federal Register of Legislative Instruments registration number F2013L01939, 14 November 2013 [D] Federal Register of Legislative Instruments registration number F2015L02032, 16 December 2015 Table of Amendments Paragraph affected How affected By.

6 [paragraph] A26 Amended ASA 2011-1 [28] Appendix 1 Para. 3 Amended ASA 2011-1 [29] Appendix 1 Sub-heading above Para. 5 Amended ASA 2011-1 [30] 6(a) Amended ASA 2013-2 [58] 22 Amended ASA 2013-2 [59] Auditing Standard ASA 315 Identifying and Assessing the Risks of material misstatement through understanding the entity and Its Environment ASA 315 - compiled - 5 - Auditing Standard Paragraph affected How affected By .. [paragraph] 23 Amended ASA 2013-2 [60] 23 and Footnote 1 Amended ASA 2013-2 [61] Heading above paragraph A6 Amended ASA 2013-2 [62] A6-A7 Amended ASA 2013-2 [63] A7 and Footnote 5 Addition ASA 2013-2 [64] A8-A13 Additions ASA 2013-2 [65] A9 and Footnote 6 Addition ASA 2013-2 [66] A11 and Footnote 7 Addition ASA 2013-2 [67] Paragraph numbers Re-numbered ASA 2013-2 [68] [70] [76] Footnote references Re-numbered ASA 2013-2 [68] A79 Addition ASA 2013-2 [69] Heading above paragraph A109 Amended ASA 2013-2 [71] A109 Amended ASA 2013-2 [72] A110-A111 Amended ASA 2013-2 [73] A112 Amended ASA 2013-2 [74] A113-A116 Additions ASA 2013-2 [75] 18 Amended ASA 2015-1 [58] 26 Amended ASA 2015-1 [59] A1 Amended ASA 2015-1 [60] A19 Amended ASA 2015-1 [61] A22 Addition ASA 2015-1 [62-63] A27 Amended ASA 2015-1 [65] A31 Amended ASA 2015-1 [66] Aus Deleted ASA 2015-1 [64] A32 Amended ASA 2015-1 [67] A81 Amended ASA 2015-1 [68]

7 A91 Addition ASA 2015-1 [69 and 71] Footnote 15 Addition ASA 2015-1 [70] A92 Addition ASA 2015-1 [72-73] A96 Amended ASA 2015-1 [74] A103 Addition ASA 2015-1 [75-76] A123 Amended ASA 2015-1 [77] A125 (pre-existing paragraph) Deleted ASA 2015-1 [85] A127 Amended ASA 2015-1 [78] Heading above paragraph A128 Addition ASA 2015-1 [80] A128 Amended ASA 2015-1 [81] Heading above paragraph A129 Addition ASA 2015-1 [82] A129 Addition ASA 2015-1 [83-84] A131 Amended ASA 2015-1 [86] Footnote 17 Addition ASA 2015-1 [87] A132 Amended ASA 2015-1 [88] A133 Addition ASA 2015-1 [89 and 91] Footnote 18 Addition ASA 2015-1 [90] Footnote 19 Addition ASA 2015-1 [90] A134 Addition ASA 2015-1 [92-93] Heading above paragraph A135 Addition ASA 2015-1 [94] A135 Addition ASA 2015-1 [95-96] Heading above paragraph A136 Addition ASA 2015-1 [97] A136 Addition ASA 2015-1 [98-99] Appendix 2 Amended ASA 2015-1 [100] Auditing Standard ASA 315 Identifying and Assessing the Risks of material misstatement through understanding the entity and Its Environment ASA 315 - compiled - 6 - Auditing Standard AUTHORITY STATEMENT Auditing Standard ASA 315 Identifying and Assessing the Risks of material misstatement through understanding the entity and Its Environment (as amended to 1 December 2015) is set out in paragraphs Aus to A155 and Appendices 1 and 2.

8 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. 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: 1 December 2015 Auditing Standard ASA 315 Identifying and Assessing the Risks of material misstatement through understanding the entity and Its Environment ASA 315 - compiled - 7 - Auditing Standard Conformity with International standards on Auditing This Auditing Standard conforms with International Standard on Auditing ISA 315 Identifying and Assessing the Risks of material misstatement through understanding the entity and Its Environment issued by the International Auditing and Assurance standards Board (IAASB), an independent Standard -setting board of the International Federation of Accountants (IFAC).

9 Paragraphs that have been added to this Auditing Standard (and do not appear in the text of the equivalent ISA) are identified with the prefix Aus . Compliance with this Auditing Standard enables compliance with ISA 315. ASA 315 - compiled - 8 - Auditing Standard Auditing Standard ASA 315 The Auditing and Assurance standards Board (AUASB) made Auditing Standard ASA 315 Identifying and Assessing the Risks of material misstatement through understanding the entity and Its Environment pursuant to section 227B of the Australian Securities and Investments Commission Act 2001 and section 336 of the Corporations Act 2001, on 27 October 2009. This compiled version of ASA 315 incorporates subsequent amendments contained in other Auditing standards made by the AUASB up to and including 1 December 2015 (see Compilation Details). Auditing Standard ASA 315 Identifying and Assessing the Risks of material misstatement through understanding the entity and Its Environment Application Aus This Auditing Standard applies to: (a) an audit of a financial report for a financial year, or an audit of a financial report for a half-year, in accordance with the Corporations Act 2001; and (b) an audit of a financial report, or a complete set of financial statements, for any other purpose.

10 Aus This Auditing Standard also applies, as appropriate, to an audit of other historical financial information. Operative Date Aus This Auditing Standard is operative for financial reporting periods commencing on or after 1 January 2010. [Note: For operative dates of paragraphs changed or added by an Amending Standard , see Compilation Details.] Introduction Scope of this Auditing Standard 1. This Auditing Standard deals with the auditor s responsibility to identify and assess the risks of material misstatement in the financial report, through understanding the entity and its environment, including the entity s internal control. Effective Date 2. [Deleted by the AUASB. Refer Aus ] Objective 3. The objective of the auditor is to identify and assess the risks of material misstatement , whether due to fraud or error, at the financial report and assertion levels, through understanding the entity and its environment, including the entity s internal control, thereby providing a basis for designing and implementing responses to the assessed risks of material misstatement .