Risk assessment steps and their changes due to the adoption of International Standard on Auditing (ISA) 315 (Revised 2019)

Abstract

Subject. This article considers the impact of the new requirements of International Standard on Auditing (ISA) 315 (Revised 2019), Identifying and Assessing the Risks of Material Misstatement through Understanding the Entity and Its Environment, on the risk-based approach applying in auditing. Objectives. The article aims to disclose the new requirements affecting one of the most important steps of auditing, namely the identification and assessment of risk in accordance with the new principles of ISA 315 revised. Methods. For the study, we used a systems approach. Results. The article summarizes the innovations of the revised Standard and proposes templates for working papers reflecting a risk-based approach application in the field of material misstatement risks. Conclusions and Relevance. The updated requirements of ISA 315 have an impact on the scope and nature of risk assessment procedures. To conduct auditing in accordance with the new requirements, organizations need to train employees and modernize working papers. The proposed templates of working papers can be used by audit organizations in their practical activities to reflect a risk-based approach in the field of material misstatement risks.