Revised Risk Assessment Standards for Audits – CAS 315

Clearline Consulting - Public Practice Headache

CAS 315 – Revised, is a difficult standard change to outline concisely. The impact of this standard change, which includes over 200 pages of application guidance, may be very pervasive depending on your current audit approach.  In order to assess the potential impact of this change you will need first assess how compliant your audit documentation is with a CAS risk based audit approach.

To assist we have provided a summary of possible self-assessment questions.  If you see your firm’s position reflected in these self-assessment questions, you may be at an impasse of questioning whether or not your firm should continue to provide audit services. You are welcome to refer to Getting out of Assurance….Maybe?, a publication we put out in 2018 as we started to encourage our firms to assess the future of the firm and the pros and cons of continuing to provide audit services.

Self-Assessment Questions:

  • My client is so small that there are no controls, a substantive approach is the best approach and documenting the control environment is just driving up audit fees while not providing any real benefit.
  • My client’s operations are so simplistic there really is no risk.  Once I have completed my overall risk assessment most of risks are Low and there is one or perhaps even no significant risks identified.  This risk assessment has very little direct impact on the amount of substantive testing that we/I have performed.
  • There is a lot of documentation in my file which looks like differing variations of “As discussed with the controller or executive director, amount is appropriate or correct” or “ The risk of fraud is low because….”  
  • My client uses off the shelf accounting software and has no IT processes or related controls I could identify or rely upon.
  • Yes, I use the CPA Canada Professional Engagement Guide methodology, but not all of it.  It is overkill for my small entity.

If you started to chuckle as you read these, you will need to reconsider your audit methodology and related documentation. This type of documentation and audit approach will not come close to achieving compliance with these revised standards. At this time the updated Professional Engagement Guide checklists are expected to be available in January 2022, however there may be further delays as the services providers update their platforms for these changes.  Ensure that you set aside the time and necessary resources to assess your firm’s compliance with the CAS 315 – Revised requirements, update your firms Caseware templates and any related audit methodology procedures and provide the necessary training to your assurance staff members. 



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