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Course Hero 9

The document discusses the auditor's responsibilities regarding documentation of risks of material misstatement due to fraud and responses to those risks. It also discusses documentation of communications about fraud to management and others. Additionally, it discusses the auditor's responsibilities to consider laws and regulations during the audit, including obtaining an understanding of the legal framework, compliance with direct laws and regulations, and identifying instances of potential noncompliance. Finally, it discusses management's responsibility for compliance with laws and regulations and establishing controls and procedures to prevent and detect noncompliance.

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318 views

Course Hero 9

The document discusses the auditor's responsibilities regarding documentation of risks of material misstatement due to fraud and responses to those risks. It also discusses documentation of communications about fraud to management and others. Additionally, it discusses the auditor's responsibilities to consider laws and regulations during the audit, including obtaining an understanding of the legal framework, compliance with direct laws and regulations, and identifying instances of potential noncompliance. Finally, it discusses management's responsibility for compliance with laws and regulations and establishing controls and procedures to prevent and detect noncompliance.

Uploaded by

nhb
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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Documentation

1. The documentation of the auditor' understanding of the entity and its environment and the assessment of the
assessment of the risks of material misstatement required by PSA 315 shall include:

a) The significant decisions reached during the discussion among the engagement team regarding the susceptibility
of the entity's financial statements to material misstatement due to fraud; and

b) The identified and assessed risks of material misstatement dude to fraud at the financial statement level and at the
assertion level.

2. The auditor's documentation of the responses to the assessed risks of material misstatement required by PSA 330
shall include:

a) The overall responses to the assessed risks of material misstatement dude to fraud at the financial statement level
and the nature, timing and extent of audit procedures, and the linkage of those procedures with assessed risks of
material misstatement dude to fraud at the assertion level; and

b) The results of the audit procedures, including those designed to address the risk of management override of
controls.

3. The auditor shall document the communications about fraud made to management, those charged with
governance, regulators and others.

4. When the auditor has concluded that the presumption that there is a risk of material misstatement due to fraud
related to revenue recognition is not applicable in the circumstances of the engagement, the auditor shall document
the reasons for that conclusion.

PSA 250

CONSIDERATION OF LAWS AND REGULATION IN AN AUDIT OF FINANCIAL STATEMENTS

1. "Noncompliance" refers to acts of omission or commission by the entity, either intentional or unintentional, which
are contrary to the prevailing laws and regulations.

2. Noncompliance does not include personal misconduct (unrelated to the business activities of the entity) by those
charged with governance, management or employees of the entity.

3. As part obtaining an understanding of the entity and its environment in accordance with PSA 315 (Redrafted), the
auditor shall obtain a general understanding of:

a) The legal and regulatory framework applicable to the entity and the industry or sector in which the entity
operates; and

b) How the entity is complying with that framework.

4. The auditor shall obtain sufficient appropriate audit evidence regarding compliance with the provisions of those
laws and regulations generally recognized to have a direct effect on the determinations of material amounts and
disclosures in the financial statements.

5. The auditor shall perform the following audit procedures to help identify instances of noncompliance with other
laws and regulations that may have a material effect on the financial statements:

a. Inquiring of management and, where appropriate, those charged with governance, as to


whether the
entity is in compliance with such laws and regulations; and
b. Inspecting correspondence, if any, with the relevant licensing or regulatory authorities.

6. During the audit, the auditor shall remain alert to the possibility that other audit procedures applied may bring
instances of noncompliance or suspected noncompliance with laws and regulations to the auditor's attention.

7. The auditor shall request management and, where appropriate, those charged with governance to provide written
representations that all known instances of noncompliance with laws and regulations whose effects should be
considered when preparing financial statements have been disclosed to the auditor.

8. In the absence of identified or suspected noncompliance, the auditor is not required to perform audit procedures
regarding the entity's compliance with laws and regulations.

Regulations of Management for the Compliance with Laws and Regulations

1. It is management's responsibility to ensure that the entity's operations are conducted in accordance with laws and
regulations.

2. The responsibility for the prevention and detection of noncompliance rests with management.

3. The following policies and procedures, among others, may assist management in discharging its responsibilities for
the prevention and detection of noncompliance:

• Monitoring legal requirements and ensuring that operating procedures and designed to meet these
requirements
• Instituting and operating appropriate systems of internal control
• Developing, publicizing, following a Code of Conduct
• Ensuring employees are properly trained and understand the Code of Conduct
• Monitoring compliance with the Code of Conduct and acting appropriately to discipline employees who fail to
comply with it

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