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Hello Sir ,
in the ACCA AA technical article for the topic of audit risk
https://www.accaglobal.com/gb/en/student/exam-support-resources/professional-exams-study-resources/p7/technical-articles/audit-risk.htmlin one of the section in the article mention about ”
In exercising judgement as to which risks are significant risks, the auditor is required to consider the following:
Whether the risk is related to recent significant economic, accounting or other developments, and therefore requires specific attention”Why the economic ,accounting or development will trigger as significant risk ,is it because it’s related to significant change to the business and therefore high risk of error and fraud?
Thank you.Note that this article is for AAA as well as AA. In AA, audit risks will be relatively obvious and you don’t need to concern yourself with “significance”. You will see for example, the mention of related parties in this section of the article, but related party transactions (IAS 24) are not examinable in FA and so the audit of them is not examinable in AA.
A significant accounting development would be, for example, the introduction of a new IFRS – relatively recent IFRSs are 15 (revenue) and 16 (leases) – these would require specific audit attention because they will affect management’s assumptions/judgments in making relevant estimates. This is not examinable in AA.
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