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ACCA Strategic Professional · Advanced Audit and Assurance (International) · Planning, materiality and assessing the risk of material misstatement

An auditor is performing risk assessment procedures on a new client, Delmar Foods. Which combination is a risk assessment procedure required by ISA 315 (Revised 2019)?

Risk assessment procedures are inquiries of management and others, analytical procedures, and observation and inspection. Tests of controls and substantive procedures are further audit procedures performed in response to assessed risks, while representations and subsequent events work belong to the completion stage.

  1. AInquiries of management, analytical procedures and observation and inspectionCorrect
  2. BTests of controls, substantive analytical procedures and external confirmations
  3. CRecalculation, reperformance and re-adding of ledgers
  4. DManagement representations, subsequent events review and going concern review

Explanation

ISA 315 requires risk assessment procedures to include inquiries of management and others, analytical procedures, and observation and inspection. Tests of controls and substantive procedures are further audit procedures responding to assessed risks, not risk assessment procedures. Representations and subsequent events are completion matters.

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