University Assignment: ASA 315 Identifying and Assessing Risks

This assignment provides a concise summary of ASA 315, focusing on identifying and assessing the risks of material misstatement through understanding the entity and its environment. The document outlines the auditor's responsibilities in obtaining and understanding the entity, including its internal controls, and assessing the risks of material misstatement in the financial report. It emphasizes the importance of management inquiries, analytical procedures, observation, and inspection in the risk assessment process. The summary highlights key requirements such as discussing the susceptibility of financial reports to material misstatements, understanding the specific industry, and assessing risks at the assertion level. Furthermore, it explains how the standard helps auditors assess risks through substantive procedures and communicate with those charged with governance. The document underscores the significance of ASA 315 in ensuring the reliability of financial reporting and the auditor's role in detecting fraud.

ASA315: ANALYSIS AND
DETERMINATION OF MATERIAL
MISSTATEMENT RISK FROM
UNDERSTANDING OF ENTITY

IDENTIFY AND ASSESS THE MATERIAL
MISSTATEMENT RISK IN THE CASE OF DETECTING
FRAUD THROUGH THE FINANCIAL REPORT AND
ASSERTION LEVEL BY THE UNDERSTANDING OF
THE ENTITY INTERNAL CONTROL.
 OBJECTIVES

THIS STANDARD OF AUDITING DEALS WITH
THE AUDITORS IMPORTANCE TO ASSESS AND
IDENTIFY THE RISKS RELATED TO MATERIAL
MISSTATEMENTS THROUGH FINANCIAL REPORT
THROUGH ENTITY UNDERSTANDING.
SCOPE

 DEFINATION
 THE PROCESS REPRESENTS THE
MATERIAL MISSTATEMENTS MADE BY
THE ENTITY IN THE FINANCIAL REPORT.
THE MANAGEMENT PROCESS DEALS
WITH THE BUSINESS RISKS RELATED
TO THE COMPANY.

 MANAGEMENT ENQUIRIES.
ANALYTICAL PROCEDURES
OBSERVATION AND INSPECTION.
AUDITOR INFORMATION'S.
 RISK ASSESSMENT
PROCESS

THIS AUDITING STANDARD ESTABLISHES NEEDFUL REQUIREMENTS AND PROVIDES GUIDANCE TO THE
COMPANY AUDITOR TO OBTAIN AND UNDERSTAND THE ENTITY AND THE ENVIRONMENT BY ASSESSING
THE MATERIAL MISSTATEMENT RISK AND ASSESSING THE FINANCIAL REPORT AUDIT. THUS THE
AUDITING STANDARD –
1. IT NEEDS THE AUDITOR TO PERFORM THE RISK ASSESSMENT TECHNIQUES TO OBTAIN AND
UNDERSTAND THE ENTITY THROUGH THE INTERNAL CONTROL.
2. IT REQUIRES THE MANAGEMENT TEAM TO DISCUISS THE SUSPECTABILITY OF THE ENTITIES FINANCIAL
REPORT TO THE MATERIAL MISSTATEMENT INCLUDING THOSE RELATED TO FRAUD.
3. IT REQUIRES THE COMPANY AUDITOR TO UNDERSTAND THE SPECIFIC INDUSTRY , INCLUDING THE
INTERNAL CONTROL OPERATION.
4. IT REQUIRES THE AUDITOR TO UNDERSTAND SPECIFIC ASPECTS OF THE ENTITY AND MATERIAL
MISSTATEMENTS IN THE ASSERTION LEVEL.
5. IT HELPS THE COMPANY AUDITOR TO ASSESS ALL POSSIBLE RISKS THROUGH SUBSTANTIVE
PROCEDURES.
6. THE AUDITORS ARE REQUIRED TO COMMUNICATE WITH THE CHARGES RELATED TO THE
GOVERNMENT EXPENDITURE OR MANAGEMENT MISSTATEMENT OF THE FINANCIAL REPORT.
 SUMAMRY OF ASA 315

Thank you