AuditingandAssuranceStandardsCouncil

PhilippineStandardonAuditing330(Redrafted)

THEAUDITORSRESPONSESTOASSESSEDRISKS
PHILIPPINESTANDARDONAUDITING330(REDRAFTED)THEAUDITORSRE
SPONSESTOASSESSEDRISKS
(Effectiveforauditsoffinancialstatementsforperiodsbeginningonorafter
December15,2009)
CONTENTS
Paragraph
Introduction
ScopeofthisPSA
..
EffectiveDate

Objective
..

1
2
3

Definitions
4

Requirements
OverallResponses
5
.
AuditProceduresResponsivetotheAssessedRisksof
MaterialMisstatementattheAssertionLevel
624
..
AdequacyofPresentationandDisclosure
25
.
EvaluatingtheSufficiencyandAppropriatenessofAuditEvidence
2628

Documentation
2931
..
ApplicationandOtherExplanatoryMaterial
OverallResponses
A1A3
.
AuditProceduresResponsivetotheAssessedRisksof
MaterialMisstatementtheAssertionLevel
A4A54
.
AdequacyofPresentationandDisclosure

A55
EvaluatingtheSufficiencyandAppropriatenessofAuditEvidence....
A56A58Documentation..A
59
Acknowledgment

PhilippineStandardonAuditing(PSA)330(Redrafted),TheAuditorsResp
onsestoAssessedRisksshouldbereadinthecontextofthePrefacetotheP
hilippineStandardsonQualityControl,Auditing,Review,OtherAssurancea
ndRelatedServices,whichsetsouttheauthorityofPSAs.

Introduction

ScopeofthisPSA
1.
ThisPhilippineStandardonAuditing(PSA)dealswiththeauditorsre
sponsibilitytodesignandimplementresponsestotherisksofmateri
almisstatementidentifiedandassessedbytheauditorinaccordanc

ewithPSA315,IdentifyingandAssessingRisksofMaterialMisstate
mentThroughUnderstandingtheEntityandItsEnvironmentinafin
ancialstatementaudit.
EffectiveDate
2.
ThisPSAiseffectiveforauditsoffinancialstatementsforperiodsbe
ginningonorafterDecember15,2009.

Objective
3.
Theobjectiveoftheauditoristoobtainsufficientappropriateaud
itevidenceabouttheassessedrisksofmaterialmisstatement,t
hroughdesigningandimplementingappropriateresponsestot
hoserisks.

Definitions
4.
ForpurposesofthePSAs,thefollowingtermshavethemeanings
attributedbelow:
1
2

(a) Substantiveprocedure
Anauditproceduredesignedtodetectmaterialmisstatementsat
theassertionlevel.Substantiveprocedurescomprise:
(i)

Testsofdetails(ofclassesoftransactions,accountbalances,andd
isclosures),and
3 (ii) Substantiveanalyticalprocedures.
(b) Testofcontrols
Anauditproceduredesignedtoevaluatetheoperatingeffectiveness
ofcontrolsinpreventing,ordetectingandcorrecting,materialmissta
tementsattheassertionlevel.

Requirements
OverallResponses

5.
Theauditorshalldesignandimplementoverallresponsestoaddress
theassessedrisksofmaterialmisstatementatthefinancialstateme
ntlevel.(Ref:Para.A1A3)
AuditProceduresResponsivetotheAssessedRisksofMaterialMisstateme
ntattheAssertionLevel
1

Theauditorshalldesignandperformfurtherauditprocedureswhose
nature,timing,andextentarebasedonandareresponsivetotheasse
ssedrisksofmaterialmisstatementattheassertionlevel.
(Ref:Para.A4A8)
1 7.

Indesigningthefurtherauditprocedurestobeperformed,theaud
itorshall:
(a)
Considerthereasonsfortheassessmentgiventotheriskofmateri
almisstatementattheassertionlevelforeachclassoftransaction
s,accountbalance,anddisclosure,including:
(i)

Thelikelihoodofmaterialmisstatementduetotheparticularchar
acteristicsoftherelevantclassoftransactions,accountbalance,o
rdisclosure(i.e.,theinherentrisk);and
(ii)

Whethertheriskassessmenttakesaccountofrelevantcontrols(i.
e.,thecontrolrisk),therebyrequiringtheauditortoobtainauditev
idencetodeterminewhetherthecontrolsareoperatingeffectivel
y(i.e.,theauditorintendstorelyontheoperatingeffectivenessofc
ontrolsindeterminingthenature,timingandextentofsubstantiv
eprocedures);and(Ref:Para.A9A18)
(b)
Obtainmorepersuasiveauditevidencethehighertheauditorsas
sessmentofrisk.(Ref:Para.A19)

TestsofControls
8.
Theauditorshalldesignandperformtestsofcontrolstoobtainsuffic
ientappropriateauditevidenceastotheoperatingeffectivenessof
relevantcontrolswhen:

(a)
Theauditorsassessmentofrisksofmaterialmisstatementattheass
ertionlevelincludesanexpectationthatthecontrolsareoperatingeff
ectively(i.e.,theauditorintendstorelyontheoperatingeffectivenes
sofcontrolsindeterminingthenature,timingandextentofsubstanti
veprocedures);or
(b)
Substantiveproceduresalonecannotprovidesufficientappropriate
auditevidenceattheassertionlevel.(Ref:Para.A20A24)
1

2
3
4

6
7
8

9.
Indesigningandperformingtestsofcontrols,theauditorshallobt
ainmorepersuasiveauditevidencethegreaterthereliancetheau
ditorplacesontheeffectivenessofacontrol.(Ref:Para.A25)
NatureandExtentofTestsofControls
10.
Indesigningandperformingtestsofcontrols,theauditorshall:
(a)
Performotherauditproceduresincombinationwithinquirytoobt
ainauditevidenceabouttheoperatingeffectivenessofthecontro
ls,including:
(i)
Howthecontrolswereappliedatrelevanttimesduringtheperiodu
nderaudit.
(ii) Theconsistencywithwhichtheywereapplied.
(iii) Bywhomorbywhatmeanstheywereapplied.(Ref:Para.A2629)
(b)
Determinewhetherthecontrolstobetesteddependuponotherco
ntrols(indirectcontrols),andifso,whetheritisnecessarytoobtain
auditevidencesupportingtheeffectiveoperationofthoseindirec
tcontrols.(Ref:Para.A3031)

TimingofTestsofControls
1

11.

Theauditorshalltestcontrolsfortheparticulartime,orthroughou
ttheperiod,forwhichtheauditorintendstorelyonthosecontrols,s
ubjecttoparagraphs12and15below,inordertoprovideanappro
priatebasisfortheauditorsintendedreliance.(Ref:Para.A32)
Usingauditevidenceobtainedduringaninterimperiod

4
5

12.
Whentheauditorobtainsauditevidenceabouttheoperatingeffe
ctivenessofcontrolsduringaninterimperiod,theauditorshall:
(a)
Obtainauditevidenceaboutsignificantchangestothosecontrols
subsequenttotheinterimperiod;and
(b)
Determinetheadditionalauditevidencetobeobtainedforthere
mainingperiod.(Ref:Para.A33A34)

Usingauditevidenceobtainedinpreviousaudits
13.

2
3
4

5
6

Indeterminingwhetheritisappropriatetouseauditevidenceaboutt
heoperatingeffectivenessofcontrolsobtainedinpreviousaudits,an
d,ifso,thelengthofthetimeperiodthatmayelapsebeforeretestinga
control,theauditorshallconsiderthefollowing:
(a)
Theeffectivenessofotherelementsofinternalcontrol,includingthec
ontrolenvironment,theentitysmonitoringofcontrols,andtheentit
ysriskassessmentprocess;
(b)
Therisksarisingfromthecharacteristicsofthecontrol,includingwhe
theritismanualorautomated;
(c) TheeffectivenessofgeneralITcontrols;
(d)
Theeffectivenessofthecontrolanditsapplicationbytheentity,inclu
dingthenatureandextentofdeviationsintheapplicationofthecontr
olnotedinpreviousaudits,andwhethertherehavebeenpersonnelch
angesthatsignificantlyaffecttheapplicationofthecontrol;
(e)
Whetherthelackofachangeinaparticularcontrolposesariskduetoc
hangingcircumstances;and
(f)
Therisksofmaterialmisstatementandtheextentofrelianceontheco
ntrol.(Ref:Para.A35)

14.
Iftheauditorplanstouseauditevidencefromapreviousauditaboutth
eoperatingeffectivenessofspecificcontrols,theauditorshallestabli

shthecontinuingrelevanceofthatevidencebyobtainingauditevide
nceaboutwhethersignificantchangesinthosecontrolshaveoccurre
dsubsequenttothepreviousaudit.Theauditorshallobtainthisevide
ncebyperforminginquirycombinedwithobservationorinspection,t
oconfirmtheunderstandingofthosespecificcontrols,and:
1

(a)
Iftherehavebeenchangesthataffectthecontinuingrelevanceofthe
auditevidencefromthepreviousaudit,theauditorshalltestthecontr
olsinthecurrentaudit.(Ref:Para.A36)
(b)
Iftherehavenotbeensuchchanges,theauditorshalltestthecontrols
atleastonceineverythirdaudit,andshalltestsomecontrolseachaud
ittoavoidthepossibilityoftestingallthecontrolsonwhichtheauditori
ntendstorelyinasingleauditperiodwithnotestingofcontrolsinthesu
bsequenttwoauditperiods.(Ref:Para.A3739)

Controlsoversignificantrisks
1

15.

Whentheauditorplanstorelyoncontrolsoverarisktheauditorhas
determinedtobeasignificantrisk,theauditorshalltestthosecont
rolsinthecurrentperiod.
2 EvaluatingtheOperatingEffectivenessofControls
Whenevaluatingtheoperatingeffectivenessofrelevantcontrols,th
eauditorshallevaluatewhethermisstatementsthathavebeendete
ctedbysubstantiveproceduresindicatethatcontrolsarenotoperati
ngeffectively.Theabsenceofmisstatementsdetectedbysubstantiv
eprocedures,however,doesnotprovideauditevidencethatcontrols
relatedtotheassertionbeingtestedareeffective.(Ref:Para.A40)
1 17.

2
3
4

Whendeviationsfromcontrolsuponwhichtheauditorintendstor
elyaredetected,theauditorshallmakespecificinquiriestounder
standthesemattersandtheirpotentialconsequences,andshalld
eterminewhether:
(a)
Thetestsofcontrolsthathavebeenperformedprovideanappropr
iatebasisforrelianceonthecontrols;
(b) Additionaltestsofcontrolsarenecessary;or
(c)
Thepotentialrisksofmisstatementneedtobeaddressedusingsu
bstantiveprocedures.(Ref:Para.A41)

3
4

Theauditorshallevaluatewhether,onthebasisoftheauditworkperf
ormed,theauditorhasidentifiedamaterialweaknessintheoperatin
geffectivenessofcontrols.
Theauditorshallcommunicatematerialweaknessesininternalcont
rolidentifiedduringtheauditonatimelybasistomanagementatana
ppropriatelevelofresponsibilityand,asrequiredbyPSA260(Revised
),Communicationwith
1

ThoseChargedwithGovernance,withthosechargedwithgoverna
nce(unlessallofthosechargedwithgovernanceareinvolvedinman
agingtheentity).
SubstantiveProcedures
1

2
3

4
5

20.
Irrespectiveoftheassessedrisksofmaterialmisstatement,thea
uditorshalldesignandperformsubstantiveproceduresforeach
materialclassoftransactions,accountbalance,anddisclosure.
(Ref:Para.A42A47)
SubstantiveProceduresRelatedtotheFinancialStatementClosin
gProcess
21.
Theauditorssubstantiveproceduresshallincludethefollowinga
uditproceduresrelatedtothefinancialstatementclosingprocess
:
(a)
Agreeingorreconcilingthefinancialstatementswiththeunderlyi
ngaccountingrecords;and
(b)
Examiningmaterialjournalentriesandotheradjustmentsmaded
uringthecourseofpreparingthefinancialstatements.
(Ref:Para.A48)

CloseoffdocumentapprovedMay2006.

SubstantiveProceduresResponsivetoSignificantRisks
1

22.
Whentheauditorhasdeterminedthatanassessedriskofmaterial
misstatementattheassertionlevelisasignificantrisk,theauditor
shallperformsubstantiveproceduresthatarespecificallyrespon

2
3

sivetothatrisk.Whentheapproachtoasignificantriskconsistsonl
yofsubstantiveprocedures,thoseproceduresshallincludetests
ofdetails.(Ref:Para.A49)
TimingofSubstantiveProcedures
23.

Whensubstantiveproceduresareperformedataninterimdate,th
eauditorshallcovertheremainingperiodbyperforming:
4 (a)
Substantiveprocedures,combinedwithtestsofcontrolsforthein
terveningperiod;or
5 (b)
Iftheauditordeterminesthatitissufficient,furthersubstantivepr
oceduresonly,thatprovideareasonablebasisforextendingthea
uditconclusionsfromtheinterimdatetotheperiodend.
(Ref:Para.A51A53)
Ifmisstatementsthattheauditordidnotexpectwhenassessingtheri
sksofmaterialmisstatementaredetectedataninterimdate,theaudi
torshallevaluatewhethertherelatedassessmentofriskandtheplan
nednature,timing,orextentofsubstantiveprocedurescoveringther
emainingperiodneedtobemodified.(Ref:Para.A54)

AdequacyofPresentationandDisclosure
25.
Theauditorshallperformauditprocedurestoevaluatewhetherthe
overallpresentationofthefinancialstatements,includingtherelat
eddisclosures,isinaccordancewiththeapplicablefinancialreporti
ngframework.(Ref:Para.A55)
EvaluatingtheSufficiencyandAppropriatenessofAuditEvidence
1

Basedontheauditproceduresperformedandtheauditevidenceobt
ained,theauditorshallevaluatebeforetheconclusionoftheauditwh
ethertheassessmentsoftherisksofmaterialmisstatementattheass
ertionlevelremainappropriate.(Ref:Para.A5657)
Theauditorshallconcludewhethersufficientappropriateauditevide
ncehasbeenobtained.Informinganopinion,theauditorshallconsid
erallrelevantauditevidence,regardlessofwhetheritappearstocorr
oborateortocontradicttheassertionsinthefinancialstatements.
(Ref:Para.A58)
Iftheauditorhasnotobtainedsufficientappropriateauditevidencea
stoamaterialfinancialstatementassertion,theauditorshallattemp

ttoobtainfurtherauditevidence.Iftheauditorisunabletoobtainsuffi
cientappropriateauditevidence,theauditorshallexpressaqualified
opinionoradisclaimerofopinion.
Documentation
29.
1

2
3

Theauditorshalldocument:
(a)
Theoverallresponsestoaddresstheassessedrisksofmaterialmisst
atementatthefinancialstatementlevel,andthenature,timing,ande
xtentofthefurtherauditproceduresperformed;
(b)
Thelinkageofthoseprocedureswiththeassessedrisksattheassertio
nlevel;and
(c)
Theresultsoftheauditprocedures,includingtheconclusionswheret
hesearenototherwiseclear.(Ref:Para.A59)
Iftheauditorplanstouseauditevidenceabouttheoperatingeffective
nessofcontrolsobtainedinpreviousaudits,theauditorshalldocume
nttheconclusionsreachedaboutrelyingonsuchcontrolsthatwerete
stedinapreviousaudit.
Theauditorsdocumentationshalldemonstratethatthefinancialsta
tementsagreeorreconcilewiththeunderlyingaccountingrecords.
***

ApplicationandOtherExplanatoryMaterialOverallResponses(Ref:
Para.5)A1.Overallresponsestoaddresstheassessedrisksofmaterialmisst
atementatthe
financialstatementlevelmayinclude:
Emphasizingtotheauditteamtheneedtomaintainprofessionalskep
ticism.
Assigningmoreexperiencedstafforthosewithspecialskillsorusinge
xperts.
Providingmoresupervision.
Incorporatingadditionalelementsofunpredictabilityintheselectio
noffurtherauditprocedurestobeperformed.
Makinggeneralchangestothenature,timing,orextentofauditproce
dures,forexample:performingsubstantiveproceduresattheperiod

endinsteadofataninterimdate;ormodifyingthenatureofauditproc
edurestoobtainmorepersuasiveauditevidence.
A2.Theassessmentoftherisksofmaterialmisstatementatthefinancialsta
tementlevel,andtherebytheauditorsoverallresponses,isaffected
bytheauditorsunderstandingofthecontrolenvironment.Aneffecti
vecontrolenvironmentmayallowtheauditortohavemoreconfidenc
eininternalcontrolandthereliabilityofauditevidencegeneratedinte
rnallywithintheentityandthus,forexample,allowtheauditortocond
uctsomeauditproceduresataninterimdateratherthanattheperiod
end.Weaknessesinthecontrolenvironment,however,havetheopp
ositeeffect;forexample,theauditormayrespondtoanineffectiveco
ntrolenvironmentby:
1
2
3

Conductingmoreauditproceduresasoftheperiodendratherthanat
aninterimdate.
Obtainingmoreextensiveauditevidencefromsubstantiveprocedur
es.
Increasingthenumberoflocationstobeincludedintheauditscope.

A3.Suchconsiderations,therefore,haveasignificantbearingontheaudito
rsgeneralapproach,forexample,anemphasisonsubstantiveproc
edures(substantiveapproach),oranapproachthatusestestsofcon
trolsaswellassubstantiveprocedures(combinedapproach).
AuditProceduresResponsivetotheAssessedRisksofMaterialMisstateme
ntattheAssertionLevel
TheNature, Timing, andExtentofFurtherAuditProcedures(Ref:Para.6)
A4.Theauditorsassessmentoftheidentifiedrisksattheassertionlevelpro
videsabasisforconsideringtheappropriateauditapproachfordesig
ningandperformingfurtherauditprocedures.Forexample,
(asappropriateandnotwithstandingthe
2

requirementsofthisPSA),theauditormaydeterminethat:
1

(a)
Onlybyperformingtestsofcontrolsmaytheauditorachieveaneffect
iveresponsetotheassessedriskofmaterialmisstatementforapartic
ularassertion;
(b)
Performingonlysubstantiveproceduresisappropriateforparticular
assertionsand,therefore,theauditorexcludestheeffectofcontrolsfr

omtherelevantriskassessment.Thismaybebecausetheauditorsri
skassessmentprocedures
Forexample,asrequiredbyparagraph20,irrespectiveoftheapproachselected,theaudi
tordesignsandperformssubstantiveproceduresforeachsignificantclassoftransactions
,accountbalance,anddisclosure.

havenotidentifiedanyeffectivecontrolsrelevanttotheassertio
n,orbecausetestingcontrolswouldbeinefficientandthereforet
heauditordoesnotintendtorelyontheoperatingeffectivenesso
fcontrolsindeterminingthenature,timingandextentofsubstan
tiveprocedures;or
(c)
Acombinedapproachusingbothtestsofcontrolsandsubstantiv
eproceduresisaneffectiveapproach.
A5.Thenatureofanauditprocedurereferstoitspurpose(i.e.,testofcontrol
sorsubstantiveprocedure)anditstype(i.e.,inspection,observatio
n,inquiry,confirmation,recalculation,reperformance,oranalytica
lprocedure).Thenatureoftheauditproceduresisofmostimportanc
einrespondingtotheassessedrisks.
A6.Timingofanauditprocedurereferstowhenitisperformed,ortheperiod
ordatetowhichtheauditevidenceapplies.
A7.Extentofanauditprocedurereferstothequantitytobeperformed,forex
ample,asamplesizeorthenumberofobservationsofacontrolactivit
y.
A8.Designingandperformingfurtherauditprocedureswhosenature,timi
ng,andextentarebasedonandareresponsivetotheassessedriskso
fmaterialmisstatementattheassertionlevelprovidesaclearlinkag
ebetweentheauditorsfurtherauditproceduresandtheriskassess
ment.
RespondingtotheAssessedRisksattheAssertionLevel(Ref:Para.7(a))
Nature
A9.Theauditorsassessedrisksmayaffectboththetypesofauditprocedur
estobeperformedandtheircombination.Forexample,whenanass
essedriskishigh,theauditormayconfirmthecompletenessofthete
rmsofacontractwiththecounterparty,inadditiontoinspectingthed
ocument.Further,certainauditproceduresmaybemoreappropriat
eforsomeassertionsthanothers.Forexample,inrelationtorevenue

,testsofcontrolsmaybemostresponsivetotheassessedriskofmiss
tatementofthecompletenessassertion,whereassubstantiveproc
eduresmaybemostresponsivetotheassessedriskofmisstatement
oftheoccurrenceassertion.
A10.Thereasonsfortheassessmentgiventoariskarerelevantindetermini
ngthenatureofauditprocedures.Forexample,ifanassessedriskislo
werbecauseoftheparticularcharacteristicsofaclassoftransactions
withoutconsiderationoftherelatedcontrols,thentheauditormayde
terminethatsubstantiveanalyticalproceduresaloneprovidesuffici
entappropriateauditevidence.Ontheotherhand,iftheassessedrisk
islowerbecauseofinternalcontrols,andtheauditorintendstobaseth
esubstantiveproceduresonthatlowassessment,thentheauditorpe
rformstestsofthosecontrols,asrequiredbyparagraph8(a).Thismay
bethecase,forexample,foraclassoftransactionsofreasonablyunifo
rm,noncomplexcharacteristicsthatareroutinelyprocessedandcontrolled
bytheentitysinformationsystem.
Timing
A11.Theauditormayperformtestsofcontrolsorsubstantiveproceduresat
aninterimdateorattheperiodend.Thehighertheriskofmaterialmiss
tatement,themorelikelyitisthattheauditormaydecideitismoreeffe
ctivetoperformsubstantiveproceduresnearerto,orat,theperioden
dratherthanatanearlierdate,ortoperformauditproceduresunanno
uncedoratunpredictabletimes(forexample,performingauditproce
duresatselectedlocationsonanunannouncedbasis).Thisisparticul
arlyrelevantwhenconsideringtheresponsetotherisksoffraud.Fore
xample,theauditormayconcludethat,whentherisksofintentional
misstatementormanipulationhavebeenidentified,auditprocedure
stoextendauditconclusionsfrominterimdatetotheperiodendwoul
dnotbeeffective.
A12.Ontheotherhand,performingauditproceduresbeforetheperiodend
mayassisttheauditorinidentifyingsignificantmattersatanearlysta
geoftheaudit,andconsequentlyresolvingthemwiththeassistanceo
fmanagementordevelopinganeffectiveauditapproachtoaddresss
uchmatters.
A13.Inaddition,certainauditprocedurescanbeperformedonlyatoraftert
heperiodend,forexample:
Agreeingthefinancialstatementstotheaccountingrecords;

Examiningadjustmentsmadeduringthecourseofpreparingthefina
ncialstatements;and
Procedurestorespondtoariskthat,attheperiodend,theentitymayh
aveenteredintoimpropersalescontracts,ortransactionsmaynotha
vebeenfinalized.
A14.Furtherrelevantfactorsthatinfluencetheauditorsconsideration
ofwhentoperformauditproceduresincludethefollowing:
1
2

Thecontrolenvironment.
Whenrelevantinformationisavailable(forexample,electronicfiles
maysubsequentlybeoverwritten,orprocedurestobeobservedmay
occuronlyatcertaintimes).
1
Thenatureoftherisk(forexample,ifthereisariskofinflatedrevenu
estomeetearningsexpectationsbysubsequentcreationoffalses
alesagreements,
2 theauditormaywishtoexaminecontractsavailableonthedateoft
heperiodend).
Theperiodordatetowhichtheauditevidencerelates.

Extent
A15.Theextentofanauditprocedurejudgednecessaryisdeterminedafter
consideringthemateriality,theassessedrisk,andthedegreeofassu
rancetheauditorplanstoobtain.Whenasinglepurposeismetbyaco
mbinationofprocedures,theextentofeachprocedureisconsidereds
eparately.Ingeneral,theextentofauditproceduresincreasesasther
iskofmaterialmisstatementincreases.Forexample,inresponsetoth
eassessedriskofmaterialmisstatementduetofraud,increasingsam
plesizesorperformingsubstantiveanalyticalproceduresatamored
etailedlevelmaybeappropriate.However,increasingtheextentofa
nauditprocedureiseffectiveonlyiftheauditprocedureitselfisreleva
nttothespecificrisk.
A16.Theuseofcomputerassistedaudittechniques(CAATs)mayenablemoreextensivetestin
gofelectronictransactionsandaccountfiles,whichmaybeusefulwh
entheauditordecidestomodifytheextentoftesting,forexample,inr
espondingtotherisksofmaterialmisstatementduetofraud.Suchtec
hniquescanbeusedtoselectsampletransactionsfromkeyelectroni
cfiles,tosorttransactionswithspecificcharacteristics,ortotestanen
tirepopulationinsteadofasample.

Considerationsspecifictopublicsectorentities
A17.Fortheauditsofpublicsectorentities,theauditmandateandanyothe
rspecialauditingrequirementsmayaffecttheauditorsconsiderati
onofthenature,timingandextentoffurtherauditprocedures.
Considerationsspecifictosmallerentities
A18.Inthecaseofverysmallentities,theremaynotbemanycontrolactiviti
esthatcouldbeidentifiedbytheauditor,ortheextenttowhichtheire
xistenceoroperationhavebeendocumentedbytheentitymaybeli
mited.Insuchcases,itmaybemoreefficientfortheauditortoperfor
mfurtherauditproceduresthatareprimarilysubstantiveprocedure
s.Insomerarecases,however,theabsenceofcontrolactivitiesorofo
thercomponentsofcontrolmaymakeitimpossibletoobtainsufficie
ntappropriateauditevidence.
HigherAssessmentsofRisk(Ref:Para7(b))
A19.Whenobtainingmorepersuasiveauditevidencebecauseofahigheras
sessmentofrisk,theauditormayincreasethequantityoftheevidenc
e,orobtainevidencethatismorerelevantorreliable,e.g.,byplacing
moreemphasisonobtainingthirdpartyevidenceorbyobtainingcorr
oboratingevidencefromanumberofindependentsources.
TestsofControls
DesigningandPerformingTestsofControls(Ref:Para.8)
A20.Testsofcontrolsareperformedonlyonthosecontrolsthattheaudit
orhasdeterminedaresuitablydesignedtoprevent,ordetectand
correct,amaterialmisstatementinanassertion.Ifsubstantially
differentcontrolswereusedatdifferenttimesduringtheperiodu
nderaudit,eachisconsideredseparately.
A21.Testingtheoperatingeffectivenessofcontrolsisdifferentfromobtaini
nganunderstandingofandevaluatingthedesignandimplementatio
nofcontrols.However,thesametypesofauditproceduresareused.T
heauditormay,therefore,decideitisefficienttotesttheoperatingeff
ectivenessofcontrolsatthesametimeasevaluatingtheirdesignand
determiningthattheyhavebeenimplemented.
A22.Further,althoughsomeriskassessmentproceduresmaynothaveb
eenspecificallydesignedastestsofcontrols,theymayneverthele

ssprovideauditevidenceabouttheoperatingeffectivenessofthec
ontrolsand,consequently,serveastestsofcontrols.Forexample,t
heauditorsriskassessmentproceduresmayhaveincluded:
1
2
3

Inquiringaboutmanagementsuseofbudgets.
Observingmanagementscomparisonofmonthlybudgetedandact
ualexpenses.
Inspectingreportspertainingtotheinvestigationofvariancesbetwe
enbudgetedandactualamounts.
Theseauditproceduresprovideknowledgeaboutthedesignofthee
ntitysbudgetingpoliciesandwhethertheyhavebeenimplemente
d,butmayalsoprovideauditevidenceabouttheeffectivenessofthe
operationofbudgetingpoliciesinpreventingordetectingmaterial
misstatementsintheclassificationofexpenses.

A23.Inaddition,theauditormaydesignatestofcontrolstobeperformedcon
currentlywithatestofdetailsonthesametransaction.Althoughthep
urposeofatestofcontrolsisdifferentfromthepurposeofatestofdetai
ls,bothmaybeaccomplishedconcurrentlybyperformingatestofcon
trolsandatestofdetailsonthesametransaction,alsoknownasadualpurposetest.Forexample,theauditormaydesign,andevaluatether
esultsof,atesttoexamineaninvoicetodeterminewhetherithasbeen
approvedandtoprovidesubstantiveauditevidenceofatransaction.
Adualpurposetestisdesignedandevaluatedbyconsideringeachpurpose
ofthetestseparately.
A24.Insomecases,asdiscussedinPSA315,theauditormayfinditimpossi
bletodesigneffectivesubstantiveproceduresthatbythemselvesp
rovidesufficientappropriateauditevidenceattheassertionlevel.T
hismayoccurwhenanentityconductsitsbusinessusingITandnodo
cumentationoftransactionsisproducedormaintained,otherthant
hroughtheITsystem.Insuchcases,paragraph8(b)requirestheaud
itortoperformtestsofrelevantcontrols.
AuditEvidenceandIntendedReliance(Ref:Para.9)
A25.Ahigherlevelofassurancemaybesoughtabouttheoperatingeffect
ivenessofcontrolswhentheapproachadoptedconsistsprimarily
oftestsofcontrols,inparticularwhereitisnotpossibleorpracticabl
etoobtainsufficientappropriateauditevidenceonlyfromsubstan
tiveprocedures.

NatureandExtentofTestsofControls
Otherauditproceduresincombinationwithinquiry(Ref:Para.10(a))
A26.Inquiryaloneisnotsufficienttotesttheoperatingeffectivenessofcon
trols.Accordingly,otherauditproceduresareperformedincombin
ationwithinquiry.Inthisregard,inquirycombinedwithinspectionor
reperformancemayprovidemoreassurancethaninquiryandobse
rvation,sinceanobservationispertinentonlyatthepointintimeatw
hichitismade.
A27.Thenatureoftheparticularcontrolinfluencesthetypeofprocedurereq
uiredtoobtainauditevidenceaboutwhetherthecontrolwasoperatin
geffectively.Forexample,ifoperatingeffectivenessisevidencedbyd
ocumentation,theauditormaydecidetoinspectittoobtainauditevid
enceaboutoperatingeffectiveness.Forothercontrols,however,doc
umentationmaynotbeavailableorrelevant.Forexample,document
ationofoperationmaynotexistforsomefactorsinthecontrolenviron
ment,suchasassignmentofauthorityandresponsibility,orforsomet
ypesofcontrolactivities,suchascontrolactivitiesperformedbyaco
mputer.Insuchcircumstances,auditevidenceaboutoperatingeffec
tivenessmaybeobtainedthroughinquiryincombinationwithothera
uditproceduressuchasobservationortheuseofCAATs.
Extentoftestsofcontrols
A28.Whenmorepersuasiveauditevidenceisneededregardingtheeffect
ivenessofacontrol,itmaybeappropriatetoincreasetheextentofte
stingofthecontrol.Aswellasthedegreeofrelianceoncontrols,matt
erstheauditormayconsiderindeterminingtheextentoftestsofcon
trolsincludethefollowing:
1 Thefrequencyoftheperformanceofthecontrolbytheentityduringth
eperiod.
2 Thelengthoftimeduringtheauditperiodthattheauditorisrelyingont
heoperatingeffectivenessofthecontrol.
3 Theexpectedrateofdeviationfromacontrol.
4 Therelevanceandreliabilityoftheauditevidencetobeobtainedrega
rdingtheoperatingeffectivenessofthecontrolattheassertionlevel.
5 Theextenttowhichauditevidenceisobtainedfromtestsofothercont
rolsrelatedtotheassertion.
PSA530,AuditSamplingandOtherMeansofTestingcontain
sfurtherguidanceontheextentoftesting.

A29.BecauseoftheinherentconsistencyofITprocessing,itmaynotbenec
essarytoincreasetheextentoftestingofanautomatedcontrol.Ana
utomatedcontrolcanbeexpectedtofunctionconsistentlyunlessth
eprogram(includingthetables,files,orotherpermanentdataused
bytheprogram)ischanged.Oncetheauditordeterminesthatanaut
omatedcontrolisfunctioningasintended(whichcouldbedoneatth
etimethecontrolisinitiallyimplementedoratsomeotherdate),the
auditormayconsiderperformingteststodeterminethatthecontrol
continuestofunctioneffectively.Suchtestsmightincludedetermini
ngthat:
1
2
3

Changestotheprogramarenotmadewithoutbeingsubjecttotheapp
ropriateprogramchangecontrols,
Theauthorizedversionoftheprogramisusedforprocessingtransacti
ons,and
Otherrelevantgeneralcontrolsareeffective.
Suchtestsalsomightincludedeterminingthatchangestotheprogr
amshavenotbeenmade,asmaybethecasewhentheentityusespa
ckagedsoftwareapplicationswithoutmodifyingormaintainingthe
m.Forexample,theauditormayinspecttherecordoftheadministra
tionofITsecuritytoobtainauditevidencethatunauthorizedaccess
hasnotoccurredduringtheperiod.

Testingofindirectcontrols(Ref:Para.10(b))
A30.Insomecircumstances,itmaybenecessarytoobtainauditevidencesu
pportingtheeffectiveoperationofindirectcontrols.Forexample,wh
entheauditordecidestotesttheeffectivenessofauserreviewofexce
ptionreportsdetailingsalesinexcessofauthorizedcreditlimits,theu
serreviewandrelatedfollowupisthecontrolthatisdirectlyofrelevan
cetotheauditor.Controlsovertheaccuracyoftheinformationinthere
ports(forexample,thegeneralITcontrols)aredescribedasindirectc
ontrols.
A31.BecauseoftheinherentconsistencyofITprocessing,auditevidencea
bouttheimplementationofanautomatedapplicationcontrol,when
consideredincombinationwithauditevidenceabouttheoperating
effectivenessoftheentitysgeneralcontrols(inparticular,changec
ontrols),mayalsoprovidesubstantialauditevidenceaboutitsoper
atingeffectiveness.
TimingofTestsofControls

Intendedperiodofreliance(Ref:Para.11)
A32.Auditevidencepertainingonlytoapointintimemaybesufficientfort
heauditorspurpose,forexample,whentestingcontrolsovertheen
titysphysicalinventorycountingattheperiodend.If,ontheotherh
and,theauditorintendstorelyonacontroloveraperiod,teststhatar
ecapableofprovidingauditevidencethatthecontroloperatedeffe
ctivelyatrelevanttimesduringthatperiodareappropriate.Suchte
stsmayincludetestsoftheentitysmonitoringofcontrols.
Usingauditevidenceobtainedduringaninterimperiod(Ref:Para.12)
A33.Relevantfactorsindeterminingwhatadditionalauditevidencetoobt
ainaboutcontrolsthatwereoperatingduringtheperiodremaining
afteraninterimperiod,include:
1
2
3
4
5
6

Thesignificanceoftheassessedrisksofmaterialmisstatementatthe
assertionlevel.
Thespecificcontrolsthatweretestedduringtheinterimperiod,andsi
gnificantchangestothemsincetheyweretested,includingchangesi
ntheinformationsystem,processes,andpersonnel.
Thedegreetowhichauditevidenceabouttheoperatingeffectivenes
softhosecontrolswasobtained.
Thelengthoftheremainingperiod.
Theextenttowhichtheauditorintendstoreducefurthersubstantive
proceduresbasedontherelianceofcontrols.
Thecontrolenvironment.

A34.Additionalauditevidencemaybeobtained,forexample,byextendin
gtestsofcontrolsovertheremainingperiodortestingtheentitysm
onitoringofcontrols.
Usingauditevidenceobtainedinpreviousaudits(Ref:Para.13)
A35.Incertaincircumstances,auditevidenceobtainedfrompreviousaudit
smayprovideauditevidencewheretheauditorperformsauditproce
durestoestablishitscontinuingrelevance.Forexample,inperformin
gapreviousaudit,theauditormayhavedeterminedthatanautomat
edcontrolwasfunctioningasintended.Theauditormayobtainaudit
evidencetodeterminewhetherchangestotheautomatedcontrolha
vebeenmadethataffectitscontinuedeffectivefunctioningthrough,
forexample,inquiriesofmanagementandtheinspectionoflogstoin
dicatewhatcontrolshavebeenchanged.Considerationofauditevid
enceaboutthesechangesmaysupporteitherincreasingordecreasi
ngtheexpectedauditevidencetobeobtainedinthecurrentperiodab

outtheoperatingeffectivenessofthecontrols.
Controlsthathavechangedfrompreviousaudits(Ref:Para.14(a))
A36.Changesmayaffecttherelevanceoftheauditevidenceobtainedinpre
viousauditssuchthattheremaynolongerbeabasisforcontinuedreli
ance.Forexample,changesinasystemthatenableanentitytoreceiv
eanewreportfromthesystemprobablydonotaffecttherelevanceof
auditevidencefromapreviousaudit;however,achangethatcauses
datatobeaccumulatedorcalculateddifferentlydoesaffectit.
Controlsthathavenotchangedfrompreviousaudits(Ref:Para.14(b))
A37.Theauditorsdecisiononwhethertorelyonauditevidenceobtainedin
previousauditsforcontrolsthat:
1
2

(a) Havenotchangedsincetheywerelasttested;and
(b) Arenotcontrolsthatmitigateasignificantrisk,
isamatterofprofessionaljudgment.Inaddition,thelengthoftimeb
etweenretestingsuchcontrolsisalsoamatterofprofessionaljudg
ment,butisrequiredbyparagraph14(b)tobeatleastonceineveryt
hirdyear.

A38.Ingeneral,thehighertheriskofmaterialmisstatement,orthegreatert
herelianceoncontrols,theshorterthetimeperiodelapsed,ifany,islik
elytobe.Factorsthatmaydecreasetheperiodforretestingacontrol,o
rresultinnotrelyingonauditevidenceobtainedinpreviousauditsatal
l,includethefollowing:
Aweakcontrolenvironment.
Weakmonitoringofcontrols.
Asignificantmanualelementtotherelevantcontrols.
Personnelchangesthatsignificantlyaffecttheapplicationofthecont
rol.
Changingcircumstancesthatindicatetheneedforchangesinthecon
trol.
WeakgeneralITcontrols.
A39.Whenthereareanumberofcontrolsforwhichtheauditorintendstorely
onauditevidenceobtainedinpreviousaudits,testingsomeofthosec
ontrolsineachauditprovidescorroboratinginformationabouttheco
ntinuingeffectivenessofthecontrolenvironment.Thiscontributest
otheauditorsdecisionaboutwhetheritisappropriatetorelyonaudit

evidenceobtainedinpreviousaudits.
EvaluatingtheOperatingEffectivenessofControls(Ref:Para.1619)
A40.Amaterialmisstatementdetectedbytheauditorsproceduresma
yindicatetheexistenceofamaterialweaknessininternalcontrol.
A41.Theconceptofeffectivenessoftheoperationofcontrolsrecognizestha
tsomedeviationsinthewaycontrolsareappliedbytheentitymayocc
ur.Deviationsfromprescribedcontrolsmaybecausedbysuchfactor
saschangesinkeypersonnel,significantseasonalfluctuationsinvol
umeoftransactionsandhumanerror.Thedetectedrateofdeviation,i
nparticularincomparisonwiththeexpectedrate,mayindicatethatt
hecontrolcannotbereliedontoreduceriskattheassertionleveltotha
tassessedbytheauditor.
SubstantiveProcedures(Ref:Para.20)
A42.Paragraph20requirestheauditortodesignandperformsubstantiv
eproceduresforeachmaterialclassoftransactions,accountbalan
ce,anddisclosure,irrespectiveoftheassessedrisksofmaterialmi
sstatement.Thisrequirementreflectsthefactsthat:
(i)theauditorsassessmentofriskisjudgmentalandsomaynotide
ntifyallrisksofmaterialmisstatement;and(ii)thereareinherentli
mitationstointernalcontrol,includingmanagementoverride.
NatureandExtentofSubstantiveProcedures
A43.Dependingonthecircumstances,theauditormaydeterminethat:
Performingonlysubstantiveanalyticalprocedureswillbesufficientt
oreduceauditrisktoanacceptablylowlevel.Forexample,wherethea
uditorsassessmentofriskissupportedbyauditevidencefromtestso
fcontrols.
Onlytestsofdetailsareappropriate.
Acombinationofsubstantiveanalyticalproceduresandtestsofdetai
lsaremostresponsivetotheassessedrisks.
PSA330(Redrafted)

A44. Substantiveanalyticalproceduresaregenerallymoreapplicabletolar
gevolumesoftransactionsthattendtobepredictableovertime.PSA52
0,AnalyticalProceduresestablishesrequirementsandprovidesguid
anceontheapplicationofanalyticalproceduresduringanaudit.
A45. Thenatureoftheriskandassertionisrelevanttothedesignoftestsofdet
ails.Forexample,testsofdetailsrelatedtotheexistenceoroccurrence
assertionmayinvolveselectingfromitemscontainedinafinancialstat
ementamountandobtainingtherelevantauditevidence.Ontheother
hand,testsofdetailsrelatedtothecompletenessassertionmayinvolv
eselectingfromitemsthatareexpectedtobeincludedintherelevantfin
ancialstatementamountandinvestigatingwhethertheyareincluded.
Becausetheassessmentoftheriskofmaterialmisstatementtakesacc
A46. ountof
internalcontrol,theextentofsubstantiveproceduresmayneedtobein
creasedwhentheresultsfromtestsofcontrolsareunsatisfactory.How
ever,increasingtheextentofanauditprocedureisappropriateonlyifth
eauditprocedureitselfisrelevanttothespecificrisk.
A47. Indesigningtestsofdetails,theextentoftestingisordinarilythoughtofi
ntermsofthesamplesize.However,othermattersarealsorelevant,inc
ludingwhetheritismoreeffectivetouseotherselectivemeansoftestin
g.SeePSA530foradditionalguidance.
SubstantiveProceduresRelatedtotheFinancialStatementClosingProcess
(Ref:Para.21(b))
A48.Thenature,andalsotheextent,oftheauditorsexaminationofjournale
ntriesandotheradjustmentsdependsonthenatureandcomplexityo
ftheentitysfinancialreportingprocessandtherelatedrisksofmateri
almisstatement.
SubstantiveProceduresResponsivetoSignificantRisks(Ref:Para.22)
A49.Paragraph22ofthisPSArequirestheauditortoperformsubstantivepr
oceduresthatarespecificallyresponsivetoriskstheauditorhasdeter
minedtobesignificantrisks.Forexample,iftheauditoridentifiesthat
managementisunderpressuretomeetearningsexpectations,there
maybeariskthatmanagementisinflatingsalesbyimproperlyrecogn
izingrevenuerelatedtosalesagreementswithtermsthatprecludere
venuerecognitionorbyinvoicingsalesbeforeshipment.Inthesecirc
umstances,theauditormay,forexample,designexternalconfirmati
onsnotonlytoconfirmoutstandingamounts,butalsotoconfirmthed
etailsofthesalesagreements,includingdate,anyrightsofreturnand
deliveryterms.Inaddition,theauditormayfinditeffectivetosupple

mentsuchexternalconfirmationswithinquiriesofnonfinancialpersonnelintheentityregardinganychangesinsalesagree
mentsanddeliveryterms.Substantiveproceduresrelatedtosignific
antrisksaremostoftendesignedtoobtainauditevidencewithhighrel
iability.
TimingofSubstantiveProcedures(Ref:Para.2324)
A50.Inmostcases,auditevidencefromapreviousauditssubstantiveproc
eduresprovideslittleornoauditevidenceforthecurrentperiod.Ther
eare,however,exceptions,e.g.,alegalopinionobtainedinaprevious
auditrelatedtothestructureofasecuritizationtowhichnochangesh
aveoccurred,mayberelevantinthecurrentperiod.Insuchcases,itm
aybeappropriatetouseauditevidencefromapreviousauditssubsta
ntiveproceduresifthatevidenceandtherelatedsubjectmatterhave
notfundamentallychanged,andauditprocedureshavebeenperfor
medduringthecurrentperiodtoestablishitscontinuingrelevance.
Usingauditevidenceobtainedduringaninterimperiod(Ref:Para.23)
A51.Insomecircumstances,theauditormaydeterminethatitiseffectivet
operformsubstantiveproceduresataninterimdate,andtocompare
andreconcileinformationconcerningthebalanceattheperiodendw
iththecomparableinformationattheinterimdateto:
1
2
3

(a) Identifyamountsthatappearunusual,
(b) Investigateanysuchamounts,and
(c)
Performsubstantiveanalyticalproceduresortestsofdetailstotestth
einterveningperiod.

A52.Performingsubstantiveproceduresataninterimdatewithoutundert
akingadditionalproceduresatalaterdateincreasestheriskthatthe
auditorwillnotdetectmisstatementsthatmayexistattheperioden
d.Thisriskincreasesastheremainingperiodislengthened.Factorss
uchasthefollowingmayinfluencewhethertoperformsubstantivep
roceduresataninterimdate:
1
2
3
4
5

Thecontrolenvironmentandotherrelevantcontrols.
Theavailabilityatalaterdateofinformationnecessaryfortheauditor
sprocedures.
Thepurposeofthesubstantiveprocedure.
Theassessedriskofmaterialmisstatement.
Thenatureoftheclassoftransactionsoraccountbalanceandrelated

assertions.
Theabilityoftheauditortoperformappropriatesubstantiveprocedu
resorsubstantiveprocedurescombinedwithtestsofcontrolstocove
rtheremainingperiodinordertoreducetheriskthatmisstatementst
hatmayexistattheperiodendwillnotbedetected.

A53.Factorssuchasthefollowingmayinfluencewhethertoperformsubst
antiveanalyticalprocedureswithrespecttotheperiodbetweenthei
nterimdateandtheperiodend:
Whethertheperiodendbalancesoftheparticularclassesoftransacti
onsoraccountbalancesarereasonablypredictablewithrespecttoa
mount,relativesignificance,andcomposition.
Whethertheentitysproceduresforanalyzingandadjustingsuchcla
ssesoftransactionsoraccountbalancesatinterimdatesandforesta
blishingproperaccountingcutoffsareappropriate.
1

2
3
4

Whethertheinformationsystemrelevanttofinancialreportingwi
llprovideinformationconcerningthebalancesattheperiodenda
ndthetransactionsintheremainingperiodthatissufficienttoper
mitinvestigationof:
(a)
Significantunusualtransactionsorentries(includingthoseatorn
eartheperiodend),
(b)
Othercausesofsignificantfluctuations,orexpectedfluctuationst
hatdidnotoccur,and
(c)
Changesinthecompositionoftheclassesoftransactionsoraccou
ntbalances.

Misstatementsdetectedataninterimdate(Ref:Para.24)
A54.Whentheauditorconcludesthattheplannednature,timing,orextento
fsubstantiveprocedurescoveringtheremainingperiodneedtobem
odifiedasaresultofunexpectedmisstatementsdetectedataninteri
mdate,suchmodificationmayincludeextendingorrepeatingthepro
ceduresperformedattheinterimdateattheperiodend.
AdequacyofPresentationandDisclosure(Ref:Para.25)
A55.Evaluatingtheoverallpresentationofthefinancialstatements,includi
ngtherelateddisclosures,relatestowhethertheindividualfinancials

tatementsarepresentedinamannerthatreflectstheappropriatecla
ssificationanddescriptionoffinancialinformation,andtheform,arra
ngement,andcontentofthefinancialstatementsandtheirappende
dnotes.Thisincludes,forexample,theterminologyused,theamount
ofdetailgiven,theclassificationofitemsinthestatements,andtheba
sesofamountssetforth.
EvaluatingtheSufficiencyandAppropriatenessofAuditEvidence(Ref:Para
.2628)
A56.Anauditoffinancialstatementsisacumulativeanditerativeprocess.A
stheauditorperformsplannedauditprocedures,theauditevidenceo
btainedmaycausetheauditortomodifythenature,timing,orextent
ofotherplannedauditprocedures.Informationmaycometotheaudit
orsattentionthatdifferssignificantlyfromtheinformationonwhicht
heriskassessmentwasbased.Forexample,
1

2
3

Theextentofmisstatementsthattheauditordetectsbyperformings
ubstantiveproceduresmayaltertheauditorsjudgmentabouttheris
kassessmentsandmayindicateamaterialweaknessininternalcontr
ol.
Theauditormaybecomeawareofdiscrepanciesinaccountingrecord
s,orconflictingormissingevidence.
Analyticalproceduresperformedattheoverallreviewstageoftheau
ditmayindicateapreviouslyunrecognizedriskofmaterialmisstate
ment.
Insuchcircumstances,theauditormayneedtoreevaluatetheplanne
dauditprocedures,basedontherevisedconsiderationofassessedri
sksforallorsomeoftheclassesoftransactions,accountbalances,ord
isclosuresandrelatedassertions.PSA315containsfurtherguidance
onrevisingtheauditorsriskassessment.

A57.Theauditorcannotassumethataninstanceoffraudorerrorisanisolat
edoccurrence.Therefore,theconsiderationofhowthedetectionof
amisstatementaffectstheassessedrisksofmaterialmisstatemen
tisimportantindeterminingwhethertheassessmentremainsappr
opriate.
A58.Theauditorsjudgmentastowhatconstitutessufficientappro
priateauditevidenceisinfluencedbysuchfactorsasthefollo
wing:
Significanceofthepotentialmisstatementintheassertionandthelik

elihoodofitshavingamaterialeffect,individuallyoraggregatedwith
otherpotentialmisstatements,onthefinancialstatements.
Effectivenessofmanagementsresponsesandcontrolstoaddressth
erisks.
Experiencegainedduringpreviousauditswithrespecttosimilarpote
ntialmisstatements.
Resultsofauditproceduresperformed,includingwhethersuchaudit
proceduresidentifiedspecificinstancesoffraudorerror.
Sourceandreliabilityoftheavailableinformation.
Persuasivenessoftheauditevidence.
Understandingoftheentityanditsenvironment,includingtheentity
sinternalcontrol.
Documentation(Ref:Para.29)
A59.Theformandextentofauditdocumentationisamatterofprofessionalj
udgment,andisinfluencedbythenature,sizeandcomplexityofthee
ntityanditsinternalcontrol,availabilityofinformationfromtheentity
andtheauditmethodologyandtechnologyusedintheaudit.

Acknowledgment
ThisPSAisbasedonInternationalStandardonAuditing330(Redrafted),Th
eAuditorsResponsestoAssessedRisks,issuedbytheInternationalAuditi
ngandAssuranceStandardsBoard.
TherearenosignificantdifferencesbetweenthisPSA330(Redrafted)
andISA330(Redrafted).
ThisPSA330(Redrafted),TheAuditorsResponsestoAssessedRisks,was
unanimouslyapprovedforadoptiononJanuary29,2007bythemembersoft
heAuditingandAssuranceStandardsCouncil.

BenjaminR.Punongbayan,Chairman

FelicidadA.Abad

AntonioP.Acyatan

ErwinVincentG.Alcala

DavidL.Balangue

FroilanG.Ampil

Ma.GraciaCasalsDiaz

AmorsoniaB.Escarda

ManuelO.Faustino

EliseoA.Fernandez

NestorioC.Roraldo

JoaquinP.Tolentino

EdithaO.Tuason

JaimeE.Ysmael