EFAA Responds to Proposed Revised Risk Assessment Audit Standard

EFAA Raises Concerns About Proposed ISA 315 (Revised) on Risk Assessment

EFAA has submitted a response to the IAASB Exposure Draft, ISA 315 (Revised), Identifying and Assessing the Risks of Material Misstatement expressing concerns about the scalability and complexity of the proposals. EFAA’s response is shown here while the Exposure Draft (ED), and all responses to the ED including EFAA’s (#68), are here.

The ED has attracted considerable attention in the accounting media as one can see here. Katharine Bagshaw, ICAEW manager of auditing standards, has said: “ISA 315 is a cornerstone standard and changes to it will affect all other standards, too. Our main reservations are about the complexity and scalability of the proposals. Without further work to the standard itself, and implementation guidance, there’s a huge risk that the proposals will be interpreted inconsistently across the board. That is not in the public interest.”

EFAA has similar concerns. As EFAA President has said “The ED for ISA 315 (Revised) is an example of how one of the most important standards for the audit approach is becoming so complex that it will no longer be suitable for the audit of small entities, and arguably even medium-sized entities.” At its December meeting of last week, the IAASB discussed general feedback (agenda item 6) to the ED.