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Comments Sought on ED SSA 315 (Revised 2021) and Conforming Amendments to Other Singapore Standards

SSA 315 (Revised) has been revised to include a more robust and consistent risk identification and assessment. The revised standard sets out clarified and enhanced requirements, and enhanced application material, to support the auditor’s risk assessment process, intended to support more focused responses to the auditor’s risk assessment in accordance with ISA 330, The Auditor’s Responses to Assessed Risks.

The proposed revised standard is based on the International Standard on Auditing (ISA) 315 (Revised 2019) Identifying and Assessing the Risks of Material Misstatement issued by the International Auditing and Assurance Standards Board (IAASB) and will be effective for audits of financial statements for periods beginning on or after 15 December 2021.

To ensure that Singapore Standards on Auditing continue to form the basis for high-quality, valuable and relevant global audits, ED-SSA 315 (Revised 2021) proposes more robust requirements and improved guidance to:

  • Drive consistent and effective identification and assessment of risks of material misstatement;
  • Modernize SSA 315 to meet evolving business needs, including information technology, and how auditors use automated tools and techniques, including data analytics, to perform audit procedures;
  • Improve the standard’s applicability to entities across a wide spectrum of circumstances and complexities; and
  • Focus auditors on exercising professional skepticism throughout the risk identification and assessment process.

The enhancements to the revised standard include:

  • Enhancing considerations in relation to the entity’s use of IT, for example, a requirement to understand the entity’s information processing activities, including its data and information, the resources to be used in such activities and related policies
  • Enhancing the application of professional skepticism in audits
    • Introducing requirement to design and perform risk assessment procedures in a manner that is not biased towards obtaining audit evidence that may be corroborative or towards excluding audit evidence that may be contradictory
    • Introducing requirement to “stand-back” and evaluate all audit evidence obtained from risk assessment procedures, whether corroborative or contradictory
  • Clarifying the nature and extent of work to be performed when obtaining an understanding of the components of the entity’s system of internal control
  • New concepts and definitions used in identifying and assessing risks of material misstatement
    • Introducing the concept of a spectrum of inherent risk and clarifying how significant risk is to be applied to it
    • Clarifying the link between the identification and assessment of risks of material misstatement and responses to the assessed risks
  • Enhancing and clarifying the need for auditors to understand the entity’s organisational structure, ownership and governance, business model and business risks

Arising from SSA 315 (Revised 2021), 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 210, Agreeing the Terms of Audit Engagements
  • SSA 230, Audit Documentation
  • SSA 240, The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements
  • SSA 250 (Revised), Consideration of Laws and Regulations in an Audit of Financial Statements
  • SSA 260 (Revised), Communication with Those Charged with Governance
  • SSA 265, Communicating Deficiencies in Internal Control to Those Charged with Governance
  • SSA 300, Planning an Audit of Financial Statements
  • SSA 330, The Auditor’s Responses to Assessed Risks
  • SSA 402, Audit Considerations Relating to an Entity Using a Service Organization
  • SSA 500, Audit Evidence
  • SSA 501, Audit Evidence—Special Considerations for Selected Items
  • SSA 530, Audit Documentation
  • SSA 550, Related Parties
  • SSA 540 (Revised), Auditing Accounting Estimates and Related Disclosures
  • SSA 600, Special Considerations—Audits of Group Financial Statements (Including the Work of Component Auditors)
  • SSA 610 (Revised 2013), Using the Work of Internal Auditors
  • SSA 620, Using the Work of an Auditor’s Expert
  • SSA 701, Communicating Key Audit Matters in the Independent Auditor’s Report
  • SSA 720 (Revised), The Auditor’s Responsibilities Relating to Other Information

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

ISCA requires all comments to be submitted to technical@isca.org.sg by 7 May 2021.

Please click here for ED-SSA 315 (Revised 2021) and conforming amendments.