SAICA: Updated FAQ on application of ISAs

SAICA: Updated FAQ on application of ISAs

• 20 January 2025
• Auditing and Assurance
• South African Accounting Academy

Summary:

SAICA has published an updated Frequently Asked Questions (FAQ) document on the application of the ISAs on matters arising from monitoring findings and other in-practice challenges.

Article:

This document was originally Issued in July 2017, then updated in October 2018, January 2020, December 2021, August 2022, August 2023 and now in December 2024.

This document contains 12 FAQs and is non-authoritative.

The following updates were made:

• FAQ 7 updated for the amendments to ISQM 1, ISA 220 (Revised) and ISA 600 (Revised)

Contents:

1. Identifying risk of material misstatement at assertion level
2. The presumption of risks of fraud in revenue recognition
3. Substantive procedures for each material class of transactions, account balance and disclosure (i.e. for each material financial statement item)
4. Testing of journal entries and other adjustments
5. Opening balances – Recurring engagements
6. Approval of Financial Statements by the entity, the dating and signing of the auditor’s report and the related documentation thereof
7. When information to be used as audit evidence involves the work of experts
8. Using the work of other auditors
9. ISA 450, Evaluation of misstatements identified during the audit
10. The auditor’s consideration of the relevance of information to be used as audit evidence: Testing the completeness assertion from an appropriate source
11. The auditor’s consideration of the reliability of information to be used as audit evidence: Obtaining audit evidence about the accuracy and completeness of information produced by the entity
12. Auditing the completeness of revenue: An illustrative example focusing on the relevance and reliability of the population from which items are selected for testing

Click here to download the 72-page FAQ document:

https://saicawebprstorage.blob.core.windows.net/uploads/resources/SAICA-FAQs-on-the-application-of-the-ISAs-on-matters-arising-from-monitoring-findings-and-other-in-practice-challenges.pdf

Relevance to Auditors, Independent Reviewers & Accountants:

• As an auditor and independent reviewer, you need to comply with International Standards on Auditing and other Assurance Services, and thus you need knowledge of newly revised standards that are approved as well as when they become effective.
• Failure to adhere to ISAs may be interpreted as negligence and you could be held liable.
• Although specific references to the ISAs have been included in this document, the auditor is still required to have an understanding of the entire text of the ISAs to assess whether or not any particular FAQ is relevant to an engagement, and if so, to enable the auditor to apply all the requirements of the particular ISAs properly.
• The concepts of professional scepticism and professional judgement should be applied in all the scenarios described in the FAQs. The different approaches presented are not necessarily the only acceptable approaches. The auditor must obtain sufficient appropriate audit evidence in the circumstances of a particular audit in accordance with the requirements of the ISAs relevant to the audit.

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