Objective
To obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement, through designing and implementing appropriate responses.
Key requirements
- Overall responses at the FS level (e.g. emphasis on professional skepticism, partner involvement)
- Further audit procedures at the assertion level — tests of controls and substantive procedures
- Substantive procedures required for each material class of transactions / balance / disclosure
- Where tests of controls are performed, sufficient evidence on operating effectiveness
- Documentation of overall responses and linkage to assessed risks
Typical procedures
- Tests of controls for high-volume routine transactions where control reliance is planned
- Substantive analytical procedures for predictable balances
- Tests of details for material balances and significant risks
Common pitfalls
- Same audit programme used regardless of risk assessment
- Tests of controls performed but not actually relied upon — wasted time
- No documented link between identified risk and the procedure that addresses it
SA 330 in practice
SA 330 sits in the Risk Assessment phase of the audit. The Standards on Auditing are issued by the ICAI Auditing and Assurance Standards Board (AASB) and deemed to be prescribed by the Central Government under Section 143(10) of the Companies Act 2013. Compliance with SAs is mandatory for every audit conducted by a Chartered Accountant in India.
For authoritative text, refer to the ICAI AASB Compendium of Standards on Auditing at icai.org.
