The International Auditing and Assurance Standards Board (IAASB) established a working
group in early 2016 to address the issues on previous ISA 315 (Redrafted) Identifying and
Assessing the Risks of material Misstatement through Understanding the Entity and Its
Environment. With the objective of driving audit quality for the public interest, the IAASB find it necessary to revise and enhance specific requirements and to develop application material and other non-authoritative guidance that would drive auditors to perform more effective risk assessment procedures through enhanced application of professional skepticism in audits of entities with various sizes and nature. Likewise, the revised standard also focused on enhancing the auditor’s approach in understanding the entity, its environment, including its internal control, and risk assessment activities in light of the changing environment.