Will Every Material Number Still Be Tested?
Today, auditors must perform substantive procedures on every material item in the financial statements, whatever its assessed risk. A proposal from the International Auditing and Assurance Standards Board (IAASB) would remove that rule.
What is being proposed
The IAASB is consulting on revisions to three core standards, last substantially revised between 2006 and 2008:
- ISA 330 covers how auditors respond to assessed risks.
- ISA 500 covers what counts as audit evidence and how it is evaluated.
- ISA 520 covers how auditors use analytical procedures.
The main debate
Supporters of removal say audit work would focus on items where risks have been identified, and that ISA 315 (Revised 2019) already requires a more robust risk assessment. Critics say risk assessment involves judgement and can miss things, and that the current rule acts as a safety net. Most users and regulators favour keeping some form of safety net. The groups consulted agree on one point: items with identified risks should receive more audit work.
Other changes to watch
- Controls testing could stand alone only where risks are not significant, and the controls must be tested in the current period.
- Information would count as audit evidence only after audit procedures are applied to it.
- Auditors would perform more procedures on document authenticity where it matters.
- Auditors would need to understand how management used an expert’s work.
- Differences from expectations would be investigated at a threshold no higher than performance materiality.
The IAASB does not propose technology-specific requirements, but its guidance warns against automation bias, which means placing undue weight on system output without appropriate audit procedures.
Timeline
Comments close on 15 December 2026, and the IAASB expects to approve the final standards in December 2027. They would take effect at least 18 months after approval. In Uganda, ICPAU determines which auditing standards apply.
What you can do now
No immediate change is required, but you can prepare:
- Talk to your auditor about how the proposals could affect your audit.
- Review your key financial and IT controls.
- Keep reports, source documents and expert work traceable.
- Share your view through the IAASB user survey before 15 December 2026.
Download the full briefing below.
Our full briefing breaks down the proposed changes to ISA 330, ISA 500 and ISA 520, with side-by-side comparisons, a worked payroll example and the related amendments to other standards.
To discuss what the proposals could mean for your organisation, contact Nexia Uganda at [email protected] or +256 793 886 240.