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Comments Sought on ED SSA 540 (Revised) and Conforming and Consequential Amendments to Other Singapore Standards

Singapore Standard on Auditing (SSA) 540 deals with the audit of accounting estimates and related disclosures. The proposed revised standard is based on the International Standard on Auditing (ISA) 540 (Revised), Auditing Accounting Estimates and Related Disclosures issued by the International Auditing and Assurance Standards Board (IAASB) and is effective for financial statement audits for periods beginning on or after 15 December 2019.

The changes include:

An enhanced risk assessment that requires auditors to consider complexity, subjectivity and other inherent risk factors in addition to estimation uncertainty. This will drive auditors to think more deeply about the risks inherent to accounting estimates;

A closer link between the enhanced risk assessment and the methods, data and assumptions used in making accounting estimates, including the use of complex models;

Specific material to show how the standard is scalable to all types of accounting estimates; and

Emphasis on the importance of applying appropriate professional scepticism when auditing accounting estimates to foster a more independent and challenging sceptical mindset in auditors.

Arising from SSA 540 (Revised), conforming amendments are made to other relevant SSAs:

SSA 200, Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with Singapore Standards on Auditing

SSA 230, Audit Documentation

SSA 240, The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements Accounting Estimates

SSA 260 (Revised), Communication with Those Charged with Governance

SSA 500, Audit Evidence

SSA 580, Written Representations

SSA 700 (Revised), Forming an Opinion and Reporting on Financial Statements

SSA 701, Communicating Key Audit Matters in the Independent Auditor’s Report

ISCA would like to seek views from key stakeholders on the above proposal.

ISCA requires all comments to be submitted to auditquality@isca.org.sg by 9 January 2019.

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