Page 57 - CA Inter Audit PARAM

CA Ravi Taori
QNO Identify & Assess Risk of Material Misstatement Old Course -- (N18M/N20R/N22M)
315.15 Bhaskar CNO- SA315-P1.100 New Course – (M24M)
The auditor shall identify and assess the risks of material misstatement at both levels to provide a basis for
designing and performing further audit procedures. For the purpose of Identifying and assessing the risks
of material misstatement the auditor shall Identify risks, assess the identified risks, relate the identified
risks and consider the likelihood of misstatement. Explain the above in detail.

OR

The objective of an auditor in accordance with SA 315 is to identify and assess risks of material
misstatement at financial statement level and assertion level. Which specific activities an auditor is required
to perform for the purpose of identifying and assessing risks of material misstatement?
Answer ➢ Levels of Risk
The auditor shall identify and assess the risks of material misstatement at:
The financial statement level; and
The assertion level for classes of transactions, account balances, and disclosures; to provide
a basis for designing and performing further audit procedures.

➢ For this purpose, the auditor shall follow the following steps:
Identify risks throughout the process of obtaining an understanding of the entity and its
environment, including relevant controls that relate to the risks, and by considering the
classes of transactions, account balances, and disclosures in the financial statements; (Har
information collect karne ke baad risk ke baarein mein sochtein raho)
Relate the identified risks to what can go wrong at the assertion level, taking account of
relevant controls that the auditor intends to test; and (Kahi assertion level pet oh nahi)
Assess the identified risks, and evaluate whether they relate more pervasively to the financial
statements as a whole and potentially affect many assertions; (Ya financial statement level
pet oh nahi)
Consider the likelihood of misstatement, including the possibility of multiple misstatements,
and whether the potential misstatement is of a magnitude that could result in a material
misstatement. (Badi risk toh nahi hai, with big amount and more probability)

QNO Assertions-Detailed Old Course -- (P16M /M16M/N16R/N17M/N17R/N17E/M18M/N18M/
315.17 Bhaskar CNO- SA315-P1.100 N18R/M19R/M20R)
What are the various assertions an auditor is concerned with while obtaining audit evidence from
substantive procedure?
OR
Risk of material misstatement at the assertion level for classes of transactions, account balances and
disclosures need to be considered. Explain stating the different categories of assertions used by the auditor.
OR
In the context of SA-3l5, state the assertions used by auditor to consider the different types of potential
mis-statements that may occur w.r.t. classes of transactions and events for period under audit.
OR
Assertions used by auditor to consider potential misstatements about presentation and disclosure at the
period end.
OR
Assertions used by auditor to consider potential misstatements about presentation and disclosure at the
period end.
OR
What does the Valuation assertion mean in respect of Assets, liabilities and equity balances? Explain with
the help of example in respect of Inventory.
Answer ➢ Risk of Material Misstatement at the Assertion Level:
According to SA 315 “Identifying and Assessing the Risk of Material Misstatement Through
Understanding the Entity and its Environment”, risks of material misstatement at the assertion
level for classes of transactions, account balances, and disclosures need to be considered because
such consideration directly assists in determining the nature, timing, and extent of further audit
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