Methodology Update—June 2020

Jun-2020

SofQC Sections

1081

Selection of engagements quality control reviews and appointment of quality reviewers

Removed reference to product leaders.

1191

Retention policies and procedures

Updated to reflect current information management process related to audit records.

1192

Confidentiality, safe custody, integrity, accessibility, and retrievability of engagements documentation

Updated OAG Policy to remove reference to TeamMate.

3062

Engagement leader responsibilities for audit quality

Updated OAG Policy to remove reference to TeamMate.

3072

Documentation of work performed using technology solutions as part of an audit

New manual section on documentation of work performed using technology solutions as part of an audit.

3073

Supervision and review considerations when using technology solutions

New manual section on supervision and review considerations when using technology solutions.

3081

Consultations

Removed reference to product leader. Updated reference to Internal Specialist for Fraud in the OAG Policy.

Glossary

Glossary

Updated and added several definitions, including statistics related terms.

Annual Audit Sections

1021

Compliance with CAS Objectives and CAS Requirements

Updated OAG Policy to remove reference to TeamMate.

2103

Performance materiality

Updated OAG Policy to replace reference to AAPT.

2335

Determining the Type of Work to Be Performed on the Financial Information of Components

Enhanced guidance on factors to consider when planning testing at components that are not significant in concluding on sufficiency of audit evidence for the group.

2363

Subsequent Events

Separated guidance on components where an audit of financial information is performed and components where work other than an audit of financial information is performed.

3047

Solicitor–Client Privilege Letter

Removed specific requirement to prepare the solicitor–client privilege letter in both official language and referred to official languages guidance in OAG Audit 2213.

3081.1

Summary of matters for consultations

Updated to reflect changes made throughout the audit manual.

3102

Involvement of IT Audit

Updated OAG Policy to update reference to the IT Audit team.

5035

Components of Internal Control—Control Activities

Removed rotational approach for observing a transaction flow through a business process.

5042

Assess Risks

Added guidance on identification of risks has a continuous process throughout the audit.

5504

Risk Assessment And Related Activities

Enhanced guidance on assessment of risk related to fraud.

5505

Assessment of the risk of material misstatement due to fraud

Updated examples of fraud schemes, identifiers and responses.

5506

Responses to the risks of material misstatement due to fraud

Enhanced guidance on incorporating element of unpredictability in audit procedures.

5508

Management Override Of Controls

Enhanced guidance on management override of controls

5509

Journal Entries

Added example on journal entries testing for smaller entity.

Updated reference to IT Audit, Control Assurance and Data Analytics Team.

5510

Evaluation Of Audit Evidence to Identify Previously Unrecognized Risks of Fraud

Additional CAS 240 guidance on obtaining appropriate representations from management.

6015

Involving a Controls Assurance specialist

Updated the objective of the Controls Assurance team and areas where a control assurance specialist may assist and support audit teams.

6023

Understand, and evaluate relevant ITGCs

Added guidance on cybersecurity risk assessment considerations.

7011.1

Audit guidance for specific financial statement areas

Added guidance on additional considerations—assessing risk of fraud in revenue recognition.

7044

Audit sampling

Updated policy to replace reference to AAPT. Updated reference to IT Audit, Controls Assurance, Data Analytics Team.

7044.1

Eight Step Approach to Performing Non‑Statistical Audit Sampling

Enhanced guidance on homogeneity of populations.

Update reference to IT Audit, Controls Assurance, Data Analytics Team.

7054

Bank Confirmations—Specific Considerations

Added examples on overcoming the rebuttable presumptions to confirm.

7055

Accounts Receivable Confirmations—Specific Considerations

Enhanced guidance on considerations specific to smaller entities.

7069.1

Testing Inventory Costs

New manual section on testing inventory cost.

7069.2

Inventory Cut‑Off Testing

New manual section on inventory cut‑off testing.

7069.3

Planning and Executing Tests of Inventory Lower of Cost or Net Realizable Value

New manual section on planning and executing tests of inventory lower of cost or net realizable value.

7513

Actions on discovery of possible non‑compliance with laws and regulations

Updated OAG Policy reference to Internal Specialist for Fraud.

7542

Communication with Entity’s External Legal Counsel

Re‑organized and streamlined guidance.

8012

Audit Report

Updated OAG Policy to replace reference to AAPT and to reflect that most auditor’s report are signed by the engagement leader rather than recommending signature to the AAG or AG.

8015

Determine and communicate key audit matters

Updated OAG Policy to replace reference to AAPT.

8034

Material inconsistencies identified

Updated OAG Policy to replace reference to AAPT.

8035

Material misstatements of the other information

Updated OAG Policy to replace reference to AAPT.

9015

Evaluating the effect of uncorrected misstatements

Updated OAG Policy to replace reference to AAPT.

9021

Use Of Overall Conclusion Analytical Procedures

Streamlined guidance.

9032

Use Of Financial Statement Disclosure Checklists

Enhanced application guidance on disclosure checklist covering a group, FS prepared under a disclosed basis of accounting or in accordance with the provisions of a contract or regulation. Updated OAG Policy to replace reference to AAPT.