Expectations with Agile November 2022 update

Expectations with Agile November 2022 update

Introduction

Prior to running the Carry forward with the Agile November 2022 template, it is important you are familiar with the following post-carry-forward impacts that will require your intervention. 


The post-carry-forward steps that need to be applied to all engagement files:
  1. Risks should be adjusted to the relevant assertion(s)
  2. Assessment ratings need to be re-evaluated
  3. ASA 220 amendments to 4-700 and 4-710

Impact 1 - Risks should be adjusted to the relevant assertion(s) 

The combined assertions have changed from C E A V to C E AV P. Consequently, when you run a carry forward with the Agile November 2022 template, these will automatically change within your risks.


What do I need to do?

Once you have confirmed the Carry Forward Options you need to open each risk and amend the assertions accordingly.


Impact 2 - Assessment ratings need to be re-evaluated 

The changes to ASA 315 has required the original Agile assessments for Inherent Risk, Control Risk and Risk of Material Misstatement to undergo a review. The changes can be reviewed using the tables below.

Former ratings (no longer applicable after Agile November 2022 carry forward):

Inherent Risk (IR)

1. Low (L)

2. Moderate (M)

3. High (H)

No automation

Control Risk (CR)

1. Low (L)

2. Moderate (M)

3. High (H)

No automation

Risk of Material Misstatement (RMM)

1. Low (L)

2. Low / Moderate (LM)

3. Moderate (M)

4. Moderate / High (MH)

5. High (H)

The RMM was automated based on simple calculations between the rating of IR and CR. 


New ASA 315 ratings (applicable after Agile November 2022 carry forward):

Likelihood of misstatement occurring (LMO)

1. Low (L)

2. High (H)

No automation

Magnitude of potential misstatement (MPM)

1. Low (L)

2. High (H)

No automation

Inherent Risk (IR)

1. Lower (L)

2. Higher (H)

3. Significant (S)

The IR is automated based on simple calculations between the rating of LMO and MPM. 

Control Risk (CR)

1. Low (L)

2. High (H)

No automation

Risk of Material Misstatement (RMM)

1. Lower (L)

2. Higher (H)

3. Significant (S)

The RMM is automated based on simple calculations between the rating of IR and CR. 




What do I need to do?

Once you have confirmed the Carry Forward Options you need to open each assessment table and re-evaluate the assessments based on the new ASA 315 risk assessment methodology.


The Error saving risk assessment message is expected as the assessment ratings pre 315 and post 315 are very different. Confirm the error message and proceed with re-evaluating your assessments.

Impact 3 - ASA 220 amendments to 4-700 and 4-710

There have been a number of content amendments for ASA 220. Consequently, this means that all previous ASA 220 procedures have likely been removed and will require you to reanswer any amendment ASA 220 procedures. 


4-700 ASA Requirements - Quality Management

Formerly 4-700 ASA Requirements - Quality Control, this workpaper previously contained a section called Quality Control for an Audit of a Financial Report and Other Historical Financial Information (ASA 220). This has since been replaced with two new sections:

  • Engagement Partner Responsibilities (Pre-signing); and

  • Engagement Partner Responsibilities (Final)

Therefore, all previous responses for ASA 220 will need to be redone under the new groups above.


4-710 ASA Requirements - Engagement Quality Review

The 4-710 checklist has been completely re-written to address the changes to ASA 220. If an Engagement Quality Review was previously required, these responses will be lost when you perform a carry forward.


What do I need to do?

Once you have confirmed the Carry Forward Options you need to open both 4-700 and 4-710 and an complete the new ASA 220 sections.