International Auditing And Assurance Standards Board
International Auditing andAssurance Standards Board Handbook of InternationalQuality Control, Auditing,Review, Other Assurance,and Related ServicesPronouncements2018 EditionVolume I
The structures and processes that support the operations of the IAASB are facilitated by theInternational Federation of Accountants or IFAC .The IAASB and IFAC do not accept responsibility for loss caused to any person who acts orrefrains from acting in reliance on the material in this publication, whether such loss is causedby negligence or otherwise.International Standards on Auditing, International Standards on Assurance Engagements,International Standards on Review Engagements, International Standards on Related Services,International Standards on Quality Control, International Auditing Practice Notes, ExposureDrafts, Consultation Papers, and other IAASB publications are published by, and copyright of,IFAC.Copyright December 2018 by IFAC. All rights reserved. This publication may be downloadedfor personal and non-commercial use (i.e., professional reference or research) or purchasedfrom www.iaasb.org. Written permission is required to translate, reproduce, store or transmit, orto make other similar uses of, this document.The ‘International Auditing and Assurance Standards Board’, ‘International Standards onAuditing’, ‘International Standards on Assurance Engagements’, ‘International Standards onReview Engagements’, ‘International Standards on Related Services’, ‘International Standardson Quality Control’, ‘International Auditing Practice Notes’, ‘IAASB’, ‘ISA’, ‘ISAE’, ‘ISRE’,‘ISRS’, ‘ISQC’, ‘IAPN’, and IAASB logo are trademarks of IFAC, or registered trademarks andservice marks of IFAC in the US and other countries.For copyright, trademark, and permissions information, please go to permissions orcontact permissions@ifac.org.529 Fifth Avenue, New York, NY 10017T 1 (212) 286-9344 F 1 (212) 286-9570www.iaasb.orgISBN: 978-1-60815-389-3
Trademarks and Registered Trademarksand Service MarksInternational Auditing and Assurance Standards Board IAASB International Standards on Auditing International Standards on Assurance EngagementsTMInternational Standards on Review EngagementsTMInternational Standards on Related ServicesTMInternational Standards on Quality ControlTMInternational Auditing Practice NotesTMISA ISAETMISRETMISRSTMISRSTMISQNTMIAPNTM
HANDBOOK OF INTERNATIONALQUALITY CONTROL, AUDITING, REVIEW, OTHERASSURANCE, AND RELATED SERVICESPRONOUNCEMENTSPART ICONTENTSPageChanges of Substance from the 2017 Edition of the Handbook and RecentDevelopments .1–2The International Federation of Accountants’ Role .3Structure of Pronouncements Issued by the International Auditing andAssurance Standards Board .4Preface to the International Quality Control, Auditing, Review, OtherAssurance, and Related Services Pronouncements .5–9Glossary of Terms .10–40INTERNATIONAL STANDARDS ON QUALITY CONTROLISQC 1, Quality Control for Firms that Perform Audits and Reviews of FinancialStatements and Other Assurance and Related Services Engagements . 41–76AUDITS OF HISTORICAL FINANCIAL INFORMATION200–299 GENERAL PRINCIPLES AND RESPONSIBILITIESISA 200, Overall Objectives of the Independent Auditor and the Conductof an Audit in Accordance with International Standards on Auditing . 77–106ISA 210, Agreeing the Terms of Audit Engagements . 107–131ISA 220, Quality Control for an Audit of Financial Statements . 132–151ISA 230, Audit Documentation . 152–164ISA 240, The Auditor’s Responsibilities Relating to Fraud in an Auditof Financial Statements . 165–209ISA 250 (Revised), Consideration of Laws and Regulations in an Audit ofFinancial Statements . 210–229ISA 260 (Revised), Communication with Those Charged with Governance. 230–259ISA 265, Communicating Deficiencies in Internal Control to ThoseCharged with Governance and Management . 260–271CONTENTS PART I
HANDBOOK OF INTERNATIONAL QUALITY CONTROL, AUDITING, REVIEW,OTHER ASSURANCE, AND RELATED SERVICES PRONOUNCEMENTSPART I300–499 RISK ASSESSMENT AND RESPONSE TO ASSESSED RISKSISA 315 (Revised), Identifying and Assessing the Risks of MaterialMisstatement through Understanding the Entity and Its Environment . 285–342ISA 320, Materiality in Planning and Performing an Audit . 343–351ISA 330, The Auditor’s Responses to Assessed Risks . 352–374ISA 402, Audit Considerations Relating to an Entity Using a ServiceOrganization . 375–398ISA 450, Evaluation of Misstatements Identified during the Audit . 399–413500–599 AUDIT EVIDENCEISA 500, Audit Evidence . 414–431ISA 501, Audit Evidence—Specific Considerations for Selected Items . 432–442ISA 505, External Confirmations . 443–454ISA 510, Initial Audit Engagements—Opening Balances . 455–468ISA 520, Analytical Procedures . 469–476ISA 530, Audit Sampling . 477–494ISA 540, Auditing Accounting Estimates, Including Fair ValueAccounting Estimates, and Related Disclosures . 495–539ISA 550, Related Parties . 540–567ISA 560, Subsequent Events . 568–580ISA 570 (Revised), Going Concern . 581–610ISA 580, Written Representations . 611–627600–699 USING THE WORK OF OTHERSISA 600, Special Considerations—Audits of Group Financial Statements(Including the Work of Component Auditors) . 628–678ISA 610 (Revised 2013), Using the Work of Internal Auditors . 679–702ISA 620, Using the Work of an Auditor’s Expert . 703–723700–799 AUDIT CONCLUSIONS AND REPORTINGISA 700 (Revised), Forming an Opinion and Reporting on FinancialStatements . 724–779ISA 701, Communicating Key Audit Matters in the Independent Auditor’sReport . 780‒803CONTENTS PART IINTERNATIONAL STANDARDS ON AUDITING AND QUALITY CONTROL CONTENTS PART IISA 300, Planning an Audit of Financial Statements . 272–284
HANDBOOK OF INTERNATIONAL QUALITY CONTROL, AUDITING, REVIEW,OTHER ASSURANCE, AND RELATED SERVICES PRONOUNCEMENTSPART IISA 705 (Revised), Modifications to the Opinion in the Independent Auditor’sReport . 804–835ISA 706 (Revised), Emphasis of Matter Paragraphs and Other MatterParagraphs in the Independent Auditor’s Report . 836–853ISA 710, Comparative Information—Corresponding Figures andComparative Financial Statements . 854–874ISA 720 (Revised), The Auditor’s Responsibilities Relating to Other Information. 875–926800–899 SPECIALIZED AREASISA 800 (Revised), Special Considerations—Audits of Financial StatementsPrepared in Accordance with Special Purpose Frameworks . 927–950ISA 805 (Revised), Special Considerations—Audits of Single FinancialStatements and Specific Elements, Accounts or Items of a FinancialStatement . 951–980ISA 810 (Revised), Engagements to Report on Summary FinancialStatements .981–1009INTERNATIONAL AUDITING PRACTICE NOTESIAPN 1000, Special Considerations in Auditing Financial Instruments . 1010–1076NEW AND REVISED STANDARDS NOT YET EFFECTIVEISA 540 (Revised) Auditing Accounting Estimates andRelated Disclosures. . 1077–1182CONTENTS PART I
This handbook contains references to International Accounting Standards (IASs) andInternational Financial Reporting Standards (IFRSs). Unless otherwise indicated,references to IASs and IFRSs are to the IASs and IFRSs in effect at the date ofpreparing a pronouncement. Accordingly, readers are cautioned that, where a revisedIAS or IFRS has been issued subsequently, reference may need to be made to themost recent IAS or IFRS.References to “country” in this handbook should be read as “country or jurisdiction.”Pronouncements Issued by the International Auditing andAssurance Standards BoardThis handbook contains the complete set of International Auditing and AssuranceStandards Board (IAASB) standards on quality control, auditing, review, otherassurance, and related services, as well as the non-authoritative InternationalAuditing Practice Notes (IAPN). It also includes a preface to the IAASB’spronouncements, a glossary of terms, and other non-authoritative material. Thishandbook replaces the 2016-2017 edition of the handbook.Additions and ChangesNote that paragraph 18 of the preface states that “Unless otherwise stated in theInternational Standard, the professional accountant is permitted to apply anInternational Standard before the effective date specified therein.”Part I of the HandbookISA 250 (Revised), Consideration of Laws and Regulations in an Audit of FinancialStatementsThis handbook includes ISA 250 (Revised), which became effective for audits offinancial statements for periods beginning on or after December 15, 2017.The revised standard, together with related conforming amendments, was includedon pages 1071–1108 of Part I of the 2016-2017 handbook. The conformingamendments have been made, together with cross-referencing and other relatedchanges, throughout the 2018 handbook. The previous ISA 250, effective for earlierperiods, is not included in the 2018 handbook.ISA 540, Auditing Accounting Estimates, Including Fair Value AccountingEstimates, and Related DisclosuresIn addition to the currently effective ISA 540, Part I of this handbook includes ISA540 (Revised) on pages 1077-1182. The revised standard is effective for audits offinancial statements for periods beginning on or after December 15, 2019, and1CHANGESCHANGESCHANGES OF SUBSTANCE FROM THE 2016-2017 EDITIONOF THE HANDBOOK AND RECENT DEVELOPMENTSReferences
CHANGES OF SUBSTANCE FROM THE 2016-2017 EDITION OFTHE HANDBOOK AND RECENT DEVELOPMENTSincludes amendments relating to an enhanced risk assessment process, a closer linkto methods, data and assumptions in making accounting estimates, scalabilityconsiderations and an emphasis on the importance of professional skepticism.PrefaceThe preface has been renumbered from paragraph 8 to adjust to the correctnumbering. This does not impact any other standards.Part II of the HandbookThere are no additions to Part II of the handbook. Amendments have been made tothe International Standards in response to the new requirements addressing noncompliance with laws and regulations (NOCLAR) in the IESBA International Codeof Ethics for Professional Accountants, together with cross-referencing and otherrelated changes.Part III of the HandbookThere are no additions to Part III of the handbook.Final Pronouncements Issued Subsequent to December 1, 2018 and ExposureDraftsFor information on recent developments and to obtain final pronouncements issuedsubsequent to December 1, 2018 or outstanding exposure drafts, visit the IAASB’swebsite at www.iaasb.org.CHANGES2
THE INTERNATIONAL FEDERATION OFACCOUNTANTS’ ROLEThe International Federation of Accountants (IFAC) serves the public interest by contributingto the development of strong and sustainable organizations, markets, and economies. Itadvocates for transparency, accountability, and comparability of financial reporting; helpsdevelop the accountancy profession; and communicates the importance and value of accountantsto the global financial infrastructure. Founded in 1977, IFAC is currently comprised of morethan 175 members and associates in more than 130 countries and jurisdictions, representingalmost 3 million accountants in public practice, education, government service, industry, andcommerce.As part of its public interest mandate, IFAC contributes to the development, adoption, andimplementation of high-quality international auditing and assurance standards, primarilythrough its support of the IAASB. IFAC provides human resources, facilities management,communications support, and funding to this independent standard-setting board, and facilitatesthe nominations and selection process for board members.The IAASB sets its own agendas and approves its publications in accordance with its dueprocess and without IFAC’s involvement. IFAC has no ability to influence the agendas orpublications. IFAC publishes the handbooks, standards, and other publications and owns thecopyrights. formal, independent public interest oversight for standard setting by the Public InterestOversight Board (see www.ipiob.org for more information), which includes a rigorousdue process involving public consultation; a public call for nominations, and formal, independent oversight of thenominations/selection process by the Public Interest Oversight Board; full transparency, both in terms of due process for standard setting, as well as publicaccess to agenda materials, meetings, and a published basis for conclusions with eachfinal standard; the involvement of a Consultative Advisory Group and observers in the standard-settingprocess; and the requirement that IAASB members, as well as nominating/employing organizations,commit to the board’s independence, integrity, and public interest mission.Visit the IFAC website at www.ifac.org for further information.3IFAC BACKGROUNDBACKGROUNDThe IAASB’s independence is safeguarded in a number of ways:
STRUCTURE OF PRONOUNCEMENTSISSUED BY THE INTERNATIONAL AUDITINGAND ASSURANCE STANDARDS BOARDIESBA Code of Ethics for Professional AccountantsEngagements Governed by the Standards of the IAASBISQCs 1–99 International Standards on Quality ControlInternational Framework for Assurance EngagementsOther Assurance EngagementsAudits and Reviews of HistoricalFinancial InformationISAEs 3000–3699International Standards on AssuranceEngagementsISAs 100–999International Standardson AuditingRelated ServicesISREs 2000–2699International Standardson Review EngagementsSTRUCTUREISRSs 4000–4699International Standards on RelatedServices4
PREFACE TO THE INTERNATIONAL QUALITY CONTROL,AUDITING, REVIEW, OTHER ASSURANCE, AND RELATEDSERVICES PRONOUNCEMENTS(Effective as of December 15, 2011)CONTENTSParagraphIntroduction .1–2The IAASB’s Pronouncements .3–4IAASB Authoritative Pronouncements .3–4The Authority Attaching to International Standards Issued by theInternational Auditing and Assurance Standards Board .5–17International Standards on Auditing .11International Standards on Quality Control .12Professional Judgment .17Applicability of the International Standards . 18–19Non-Authoritative Material . 20–22International Auditing Practice Notes . 21–22Practice Notes Relating to Other International Standards .23Staff Publications .24Language .255PREFACEPREFACEOther International Standards . 13–16
PREFACE TO THE INTERNATIONAL QUALITY CONTROL, AUDITING, REVIEW, OTHERASSURANCE, AND RELATED SERVICES PRONOUNCEMENTSIntroduction1.This preface to the International Quality Control, Auditing, Review, OtherAssurance, and Related Services Pronouncements is issued to facilitateunderstanding of the scope and authority of the pronouncements theInternational Auditing and Assurance Standards Board (IAASB) issues, as setforth in the IAASB’s Terms of Reference.2.The IAASB is committed to the goal of developing a set of InternationalStandards and other pronouncements which are generally accepted worldwide.IAASB members act in the common interest of the public at large and theworldwide accountancy profession. This could result in their taking a positionon a matter that is not in accordance with current practice in their country orfirm or not in accordance with the position taken by those who put themforward for membership of the IAASB.The IAASB’s PronouncementsIAASB Authoritative Pronouncements3.The IAASB’s pronouncements govern audit, review, other assurance, andrelated services engagements that are conducted in accordance withInternational Standards. They do not override the local laws or regulations thatgovern the audit of historical financial statements or assurance engagements onother information in a particular country required to be followed in accordancewith that country’s national standards. In the event that local laws orregulations differ from, or conflict with, the IAASB’s Standards on a particularsubject, an engagement conducted in accordance with local laws or regulationswill not automatically comply with the IAASB’s Standards. A professionalaccountant should not represent compliance with the IAASB’s Standardsunless the professional accountant has complied fully with all standardsrelevant to the engagement.4.The authoritative pronouncements of the IAASB are the InternationalStandards, which are issued following the IAASB’s stated due process.The Authority Attaching to International Standards Issued by theInternational Auditing and Assurance Standards Board5.International Standards on Auditing (ISAs) are to be applied in the audit ofhistorical financial information.6.International Standards on Review Engagements (ISREs) are to be applied inthe review of historical financial information.7.International Standards on Assurance Engagements (ISAEs) are to be appliedin assurance engagements other than audits or reviews of historical financialinformation.PREFACE6
PREFACE TO THE INTERNATIONAL QUALITY CONTROL, AUDITING, REVIEW, OTHERASSURANC
ISA 315 (Revised), Identifying and Assessing the Risks of Material . International Standard, the professional accountant is permitted to apply an International Standard before the effective date specified therein.” . International Auditing and Assurance Standards Board. ASSURANCE, AND RELATED SERVICES PRONOUNCEMENTS.
of Auditing and Assurance-Introduction (Auditing 1) and Auditing and Assurance-Intermediate (Auditing 2). This course is designed to provide an introduction to auditing and assurance services. Level of Proficiency in Auditing 1: Foundation Subject Learning Outcome Upon completion of the subj
Introduction to Assurance and Financial Statement Auditing 1 Chapter 1 An Introduction to Assurance and Financial Statement Auditing 2 Tips for Learning Auditing 4 The Demand for Auditing and Assurance 5 Principals and Agents 5 The Role of Auditing 6 An Assurance Analogy: The Case of
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International Auditing and Assurance Standards Board (IAASB) issues: International Standards on Auditing (ISAs) as the standards to be applied by auditors in reporting on historical financial information. International Standards on Assurance Engagements (ISAEs) as the standards to
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SECTION-1 (AUDITING) INTRODUCTION TO AUDITING STRUCTURE: 1.1 Objectives 1.2 Introduction -an overview of auditing 1.3 Origin and evolution 1.4 Definition 1.5 Salient features 1.6 Scope of auditing 1.7 Principles of auditing 1.8 Objects of audit 1.9 Detection and prevention of fraud 1.2 1.10 Concept of " true and fair view"
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