Departing from an ISA requirement: the rare exception
When ISA 200 lets an auditor depart from a relevant requirement, what alternative procedure is needed instead, and what must be documented on file.
By Achekam · · 5 min read · For Accountants & audit firms in South Africa, Nigeria, Kenya
A senior marks a step "not applicable" because the client is small. A manager skips a confirmation because the debtor never replies. A partner tells the team that a required procedure "doesn't really work for this kind of client". Each of these may be a reasonable judgement. Each may also be a departure from an ISA requirement, made without the conditions, the alternative work and the documentation the standards demand.
ISA 200 does allow departures, but only in narrow circumstances and with strings attached. This article explains when an auditor may depart from a relevant requirement, what must be done instead, how to document it, and why it differs from simply leaving work out.
What a relevant requirement is, and why the whole text matters
ICAEW, explaining ISA 200, notes that the auditor must understand the entire text of each ISA, including its application and other explanatory material, which also contains guidance specific to audits of smaller entities.
That is the starting point for any departure question. A requirement that seems unworkable for a small client may already be addressed in the application material, with guidance on how to apply it proportionately. Many apparent conflicts between a requirement and a small audit disappear once the full text is read.
ISA 200 itself explains when a requirement counts as relevant, and it is worth reading that paragraph before calling anything a departure. A requirement that depends on circumstances absent from this engagement, such as one about using internal audit where the client has none, is a different matter from a departure. Record why it does not apply, but do not treat it as one.
The rare, exceptional circumstances
ICAEW explains that ISA 200 allows a departure from a relevant requirement only in rare and exceptional circumstances where the required procedure would be ineffective in achieving the aim of the requirement.
Every word narrows it:
- Rare and exceptional. Not a routine shortcut, and not something that recurs on every audit of a certain type.
- Ineffective. The procedure would not achieve its aim in these circumstances. Being difficult, slow, expensive or unwelcome to the client is not the same as being ineffective.
- The aim of the requirement. The auditor must understand what the requirement is trying to achieve, because that aim still has to be met.
If the honest description is "we did not have time" or "the client would not cooperate", it is not a permitted departure. It may instead be a limitation on scope, with consequences for the opinion.
Designing an alternative procedure
ICAEW explains that, where a departure is justified, the auditor must perform alternative procedures to achieve the aim of the requirement. The alternative is not optional and not a lighter version. It is a different route to the same destination.
A practical way to design one:
- State the aim of the requirement in one sentence.
- Explain why the required procedure would not achieve it here, specifically.
- Identify what evidence would achieve it in these circumstances.
- Design the procedure that obtains that evidence.
- Assess the result: did the alternative actually achieve the aim?
If no alternative achieves the aim, the departure route is closed. ICAEW explains that under ISA 200, if an objective in a relevant ISA cannot be achieved and this prevents the overall objectives being achieved, the auditor must modify the opinion or, where permitted, withdraw from the engagement.
Documenting the departure
ICAEW, citing ISA 200 and ISA 230, explains that the auditor must document the reason for the departure and how the alternative procedures achieve the aim of the requirement. The working paper should record:
- the requirement departed from, by reference;
- the specific circumstances that made the required procedure ineffective;
- the aim of the requirement;
- the alternative procedure, who performed it and when;
- the evidence obtained and why it achieves the aim;
- the conclusion, reviewed by the engagement partner.
A reviewer, internal or external, should be able to follow the reasoning without asking anyone. Our article on audit documentation under ISA 230 covers the wider documentation requirements.
Setting a step aside with a written reason in Achekam
Achekam's work items list the procedures to perform and the documents required. A step is marked done only with a written response and its documents, or set aside with a reason, and steps are never deleted. A departure therefore cannot vanish from the file: the required step remains visible, set aside with its reason, and the alternative procedure can be recorded as its own step with its own response and evidence.
Each working paper moves through preparation, manager review, partner review, an optional engagement quality review, completion and lock. The preparer cannot also review it, Achekam refuses any sign-off made by an AI, and sending back, reopening or locking needs a written reason. A departure recorded on a paper is therefore seen by at least one reviewer who did not make it.
Where departures recur for a type of client, the methodology may be the problem. A firm's partners can keep their own methodology and working-paper templates beside Achekam's platform methodology, and a template version is published only by someone other than its author. See firm methodology and templates for how firms adapt them.
Why a departure is not skipping work
ICAEW notes that ISA 200 prohibits the auditor from representing compliance with ISAs in the auditor's report unless the auditor has complied with ISA 200 and all other ISAs relevant to the audit. The report's statement that the audit was conducted in accordance with the ISAs is only true if every relevant requirement was either met or departed from properly.
So a skipped step is not a minor file weakness. If it was a relevant requirement, and the departure conditions were not met, the report's claim of ISA compliance is not supported. Reviewers and regulators read files with exactly that question in mind.
ICAEW's guide to achieving audit objectives under ISA 200 explains the overall objectives, the departure rule and the consequences of not achieving an objective, citing the relevant paragraphs.
At your next file review, search for every step marked "not applicable" or set aside, and ask which of them were departures. The answer is often more than expected, and each one needs its reason and its alternative.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
