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CS Professional · Compliance Management, Audit and Due Diligence · Audit Process and Documentation

During the audit of Narmada Chemicals Ltd, the auditor evaluates the design of controls over inventory and tests that they are implemented. How does SA 315 treat the information gathered in doing so?

The information is used as audit evidence to support the risk assessment. SA 315 says this risk assessment in turn determines the nature, timing and extent of the further audit procedures to be performed, rather than replacing them.

  1. AIt is not audit evidence and is discarded after planning
  2. BIt is used as audit evidence to support the risk assessment, which determines the nature, timing and extent of further audit proceduresCorrect
  3. CIt replaces all substantive procedures
  4. DIt is relevant only for the management letter

Explanation

SA 315 states that information from risk assessment procedures, including evidence from evaluating control design and implementation, is used as audit evidence supporting the risk assessment. That assessment then determines the nature, timing and extent of further procedures. It does not replace substantive procedures.

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