He said under the new regime, the auditor and consequently the management of business entities would have to present written submission on risks considered and any actions taken to mitigate that risks in the preparation of the financial statements.
In the past, putting “Non Applicable / NA” in checklist may suffice.
To carry that idea to the extreme (if it is not in the extreme now) would be that a management of a business entity now could be required by the auditor to provide a management representation letter certifying that
- all risks, man made or otherwise, has been considered and deemed acceptable
- and also attached supporting documents for that conclusion ie. weather reports from MET office, geography records for earthquake risks, CIA reports for terrorist risks etc etc etc.
Does it mean higher audit fees too? 🙂