The implementation of this standard will give auditors much more control over the audit process. This gives the auditors the tools they need to meet their responsibilities with respect to professional skepticism. Auditors are responsible for the quality of the financial statements, and this standard gives them the mandate to be sufficiently creative in the audit design so as to detect misstatement.
The change benefits experienced auditors in particular, and places the onus on inexperienced auditors to learn quickly how to assess risk. Improper assessment of the risk of misstatement will result in poorly designed audits and therefore increased risk of misstatements passing through the audit. Experienced auditors will be better able to design audits that detect misstatement because they will better understand the risks. For companies, this additional degree of empowerment to the auditors will place addition risk...
With the auditor having substantial flexibility over the nature, timing and controls of the audit, the company will need to ensure that the financial statements it produces are accurate. The unpredictable nature of the audit process will make it more difficult for companies to commit fraud of unintentional misstatement, so the companies themselves will need to implement more controls to ensure that their financial statements will pass audit.
The implementation of this standard will change the way audits are conducted because it will emphasize advanced planning of the audit -- a risk assessment will first be conducted followed by an audit design. In addition, this standard will emphasize the building of longer-term relationships between companies and auditors because the greater level of experience an auditor has with the company, the better the audit design will be.
