Amendments to ASA 701Amendments to ASA 701

Amendments to ASA 701

1. The following paragraph and footnote are inserted after existing paragraph A8 of this Auditing Standard:

ASA 240[15] includes requirements for determining and communicating key audit matters related to fraud. The requirements and guidance in ASA 240 refer to, or expand on, the application of this ASA.

1. The following paragraph and footnote are inserted after existing paragraph A18 of this Auditing Standard:

ASA 240[23] notes that matters related to fraud are often matters that require significant auditor attention and that, given the interest of users of the financial reports, one or more of the matters related to fraud that required significant auditor attention in performing the audit, determined in accordance with paragraph 60 of ASA 240, would ordinarily be of most significance in the audit of the financial reports of the current period and therefore are key audit matters.

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

However, this may not be the case for all significant risks. For example, ASA 240 presumes that there are risks of fraud in revenue recognition and requires the auditor to treat those assessed risks of material misstatement due to fraud as significant risks. In addition, ASA 240 indicates that, due to the unpredictable way in which management override of controls could occur, it is a risk of material misstatement due to fraud and thus a significant risk. The auditor may determine these matters to be key audit matters related to fraud because risks of material misstatement due to fraud are often matters that both require significant auditor attention and are of most significance in the audit. However, this may not be the case for all these matters. The auditor may determine certain risks of material misstatement due to fraud did not require significant auditor attentionDepending on their nature, these risks may not require significant auditor attention, and therefore, these risks would not be considered in the auditor’s determination of key audit matters in accordance with paragraph 10.

1. Existing footnote 25 is amended to read as follows:

See ASA 240 The Auditor’s Responsibilities Relating to Fraud in an Audit of a Financial Report, paragraphs 26–2739(b) and 41.

1. Existing footnote 26 is amended to read as follows:

See ASA 240, paragraphs 3139(b) and 40.

1. A new footnote is inserted in paragraph A55 as follows:

It may also be necessary for the auditor to consider the implications of communicating about a matter determined to be a key audit matter in light of relevant ethical requirements. In addition, the auditor may be required by law or regulation to communicate with applicable regulatory, enforcement or supervisory authorities in relation to the matter, regardless of whether the matter is communicated in the auditor’s report. Such communication may also be useful to inform the auditor’s consideration of the adverse consequences that may arise from communicating about the matter.