Overall ResponsesOverall Responses

Overall Responses

8 The auditor shall determine overall responses to address the risks of material misstatement at the financial report level.

9 Such responses may include emphasising to the audit team the need to maintain professional scepticism in gathering and evaluating audit evidence, assigning more experienced staff or those with special skills or using experts,[1] providing more supervision, or incorporating additional elements of unpredictability in the selection of further audit procedures to be performed. Additionally, the auditor may make general changes to the nature, timing, or extent of audit procedures as an overall response, for example, performing substantive procedures at period end instead of at an interim date.

10 The assessment of the risks of material misstatement at the financial report level 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 period end. If there are weaknesses in the control environment, the auditor ordinarily:

• conducts more audit procedures as of the period end rather than at an interim date;
• seeks more extensive audit evidence from substantive procedures;
• modifies the nature of audit procedures to obtain more persuasive audit evidence; or
• increases the number of locations to be included in the audit scope.

11 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).