Responses to the Assessed Risks of MaterResponses to the Assessed Risks of Material Misstatement Due to Fraud

Responses to the Assessed Risks of Material Misstatement Due to Fraud

Designing and Performing Audit Procedures in a Manner That Is Not Biased

1. The auditor shall design and perform audit procedures in response to the assessed risks of material misstatement due to fraud in a manner that is not biased towards obtaining audit evidence that may corroborate management’s assertions or towards excluding audit evidence that may contradict such assertions.

Unpredictability in the Selection of Audit Procedures

1. In determining responses to address assessed risks of material misstatement due to fraud, the auditor shall incorporate an element of unpredictability in the selection of the nature, timing and extent of audit procedures. (Ref: Para. A126–A127)

Overall Responses

1. In accordance with ASA 330,[26] the auditor shall determine overall responses to address the assessed risks of material misstatement due to fraud at the financial report level. (Ref: Para. A128)
2. In determining overall responses to address the assessed risks of material misstatement due to fraud at the financial report level, the auditor shall evaluate whether the selection and application of accounting policies by the entity, particularly those related to subjective measurements and complex transactions, may be indicative of fraudulent financial reporting.

Audit Procedures Responsive to the Assessed Risks of Material Misstatement Due to Fraud at the Assertion Level

1. In accordance with ASA 330,[27] the auditor shall design and perform further audit procedures whose nature, timing and extent are based on and are responsive to the assessed risks of material misstatement due to fraud at the assertion level. (Ref: Para. A129–A135)

Audit Procedures Responsive to Risks of Material Misstatement Due to Fraud Related to Management Override of Controls

1. Irrespective of the auditor’s assessment of the risks of management override of controls, the auditor shall design and perform the audit procedures in accordance with paragraphs 48–52, and determine whether other audit procedures are needed in addition to those in paragraphs 48–52, in order to respond to the identified risks of management override of controls.

Journal Entries and Other Adjustments

1. The auditor shall design and perform audit procedures to test the appropriateness of journal entries recorded in the general ledger and other adjustments made in the preparation of the financial report. (Ref: Para. A136–A139)
2. In designing and performing audit procedures in accordance with paragraph 48, the auditor shall: (Ref: Para. A99)