Auditing Standard 330: Independent Auditor’s Encounters with Assessed Risks

Auditing standard 330: Independent auditor’s encounters with assessed risks

Auditing Standard 330 We have talked about this law for you to get familiar with this law.

General encounters

The independent auditor should determine the overall treatment for the article with the risks of material misstatement assessed at the financial statement level.

General considerations for an article with assessed risks of material misstatement at the financial statement level may include the following:

Emphasis to the members of the audit team regarding the need to maintain an attitude of professional skepticism.
The use of auditors regarding the need to maintain an attitude of professional skepticism
Employing auditors with more experience or having special skills or using an expert.
More guardianship practices
Increasing the use of unpredictable elements in the selection of necessary audit methods.
Creating a general change in the nature, timing of implementation or the amount of necessary audit methods.
Creating a general change in the nature, timing of its implementation during the period, adjusting the nature of audit methods to obtain more convincing audit evidence (paragraph 1).

The assessment of significant distortion risks at the level of financial statements as a result of the independent auditor’s general approaches to deal with them is influenced by his knowledge of the control environment.

An effective control environment can increase the independent auditor’s confidence in the internal controls and the reliability of the audit evidence created in the business entity, and as a result, for example, the independent auditor can perform some audit procedures instead of completing the period.

However, the inadequacy of the control environment has the opposite effect, for example, the independent auditor may counter through the following ineffectiveness of the control environment:

Implementing more audit procedures at the end of the course instead of during the course.
Obtain more audit evidence by performing content tests.
Increasing the number of places that are included in the audit scope (paragraph 2)

Therefore, the mentioned considerations have a major impact on the general approach of the independent auditor.

For example, emphasis on content tests (content approach), or an approach that simultaneously uses tests of controls and content tests (combined approach) (paragraph 3).