Proposal to revise ISA (UK) 315 (Revised June 2016) Identifying and Assessing the Risks of Material Misstatement through Understanding of the Entity and its Environment
28 January 2020
The Financial Reporting Council (FRC) proposes, subject to consultation, to issue a revised version of International Standard on Auditing (UK) (ISA (UK) 315 (Revised June 2016) Identifying and Assessing the Risks of Material Misstatement Through Understanding the Entity and Its Environment, to reflect recent revisions to the international standards on auditing issued by the International Auditing and Assurance Standards Board (IAASB).
The revisions made by the IAASB are designed to establish a more robust and consistent risk identification and assessment. A more robust risk assessment process enhances the basis upon which auditors design and perform audit procedures that are responsive to the risks of material misstatement and, thereby, obtain sufficient appropriate audit evidence to provide a basis for the audit opinion. As the ISA (UK) is being updated to reflect changes made at the international level, and we are satisfied that the revised standard has been amended in a way that sufficiently addresses matters raised by the FRC in its comment letter on the IAASB’s Exposure Draft, the FRC is not proposing to add any new UK requirements.
As a result, we are able to confirm in the attached impact assessment that no additional work effort, beyond that which may be required by changes in the international standard, is expected to result from regulatory decisions taken by the FRC. In issuing the revised standard for consultation, the FRC has carried over the small amount supplementary material added to ISA (UK) 315 (Revised June 2016), which clarifies who are 'those charged with governance' in a UK context and identifies that they are the appropriate persons to provide critical written representations in line with ISA (UK) 580,
Invitation to comment
The FRC is requesting comments on this Consultation Paper by 5pm on Friday, 3 April 2020.
Comments are invited in writing on all aspects of the Consultation Paper. In particular, comments are sought in relation to questions 1-3 as discussed in the paper. Comments on the Consultation Paper should be sent to:
Financial Reporting Council