Page 132 - Auditing Standards
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As of December 15, 2017
determination of whether an account or disclosure is significant is based on inherent risk, without regard to the
effect of controls.
34 AS 2201.A9 states:
A relevant assertion is a financial statement assertion that has a reasonable possibility of containing a
misstatement or misstatements that would cause the financial statements to be materially misstated. The
determination of whether an assertion is a relevant assertion is based on inherent risk, without regard to the
effect of controls.
35 The auditor might perform substantive auditing procedures because his or her assessment of the risk that
undetected misstatement would cause the financial statements to be materially misstated is unacceptably high
or as a means of introducing unpredictability in the procedures performed. See AS 2810.11, .14, and .25, for
further discussion about undetected misstatement. See AS 2201.61 and AS 2301.5c, for further discussion
about the unpredictability of auditing procedures.
36 AS 2301 discusses the auditor's response to fraud risks and other significant risks.
37 AS 2201.14 presents examples of controls that address fraud risks.
38 See also AS 2301.46.
Footnotes (Appendix B - Consideration of Manual and Automated Systems and Controls):
1 See also AS 2601, Consideration of an Entity's Use of a Service Organization, if the company uses a
service organization for services that are part of the company's internal control over financial reporting.
2 See also paragraphs .16-.17 of AS 2101, Audit Planning.
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