Amendments to ASA 505Amendments to ASA 505

Amendments to ASA 505

1. Existing paragraph 3 is amended to read as follows:

Other Auditing Standards recognise the importance of external confirmations as audit evidence, for example:

• …
• ASA 240 indicates that the auditor may design external confirmation proceduresrequests to obtain audit evidenceadditional corroborative information as a response to address the assessed risks of material misstatement due to fraud at the assertion level.
• …

1. Existing footnote 10 in paragraph 3 is amended to read as follows:

See ASA 240 The Auditor’s Responsibilities Relating to Fraud in an Audit of a Financial Report, paragraphs A129–A135 A37.

1. Existing paragraph 8 is amended to read as follows:

If management refuses to allow the auditor to send a confirmation request, the auditor shall:

(a) …

(b) Evaluate the implications of management’s refusal on the auditor’s assessment of the relevant risks of material misstatement, including the risks of material misstatement due to fraud, and on the nature, timing and extent of other audit procedures; and (Ref: Para. A9)

(c) …

1. Existing paragraph 11 is amended to read as follows:

If the auditor determines that a response to a confirmation request is not reliable, the auditor shall evaluate the implications on the assessment of the relevant risks of material misstatement, including the risks of material misstatement due to fraud, and on the related nature, timing and extent of other audit procedures. (Ref: Para. A17)

1. Existing paragraph A4 is amended to read as follows:

Factors to consider when designing confirmation requests include:

• The assertions being addressed.
• Specific identified risks of material misstatement, including risks of material misstatement due to fraud risks.
• …

1. Existing footnote 15 in paragraph A9 is amended to read as follows:

See ASA 240, paragraph 2438.

1. Existing footnote 19 in paragraph A17 is amended to read as follows:

See ASA 240, paragraph 2438.

1. Existing footnote 21 in paragraph A19 is amended to read as follows:

See ASA 240, paragraph 2438.

1. Existing paragraph A21 is amended to read as follows:

Exceptions noted in responses to confirmation requests may indicate misstatements or potential misstatements in the financial statements. When a misstatement is identified, the auditor is required by ASA 450ASA 240 to evaluate whether such misstatement is indicative of fraud. Exceptions may provide a guide to the quality of responses from similar confirming parties or for similar accounts. Exceptions also may indicate a deficiency, or deficiencies, in the entity’s internal control over financial reporting.