Document ID: chunk:federal_register_of_legislation:F2020L00252:body:0:p46
Version: federal_register_of_legislation:F2020L00252
Segment Type: other
Provision Reference: 
Character Range: 128641–131736

entity's controls over related party relationships and transactions.  In some circumstances, however, it may not be possible to obtain sufficient appropriate audit evidence from substantive audit procedures alone in relation to the risks of material misstatement associated with related party relationships and transactions.  For example, where intra-group transactions between the entity and its components are numerous and a significant amount of information regarding these transactions is initiated, recorded, processed or reported electronically in an integrated system, the auditor may determine that it is not possible to design effective substantive audit procedures that by themselves would reduce the risks of material misstatement associated with these transactions to an acceptably low level.  In such a case, in meeting the ASA 330 requirement to obtain sufficient appropriate audit evidence as to the operating effectiveness of relevant controls,26 the auditor is required to test the entity's controls over the completeness and accuracy of the recording of the related party relationships and transactions.

Amendments to ASA 570

190.           Existing footnote 3 in paragraph 10 is amended to read as follows:

See ASA 315 Identifying and Assessing the Risks of Material Misstatement through Understanding the Entity and Its Environment, paragraph 513.

191.           Existing footnote 10 in paragraph A7 is amended to read as follows:

See ASA 315, paragraph 3137.

Amendments to ASA 600

192.           Existing paragraph 17 is amended to read as follows:

The auditor is required to identify and assess the risks of material misstatement through obtaining an understanding of the entity and its environment, the applicable financial reporting framework and the system of internal control.7 The group engagement team shall:

…

193.           Existing paragraph A6 is amended to read as follows:

The group engagement team may also identify a component as likely to include significant risks of material misstatement of the group financial report due to its specific nature or circumstances.  (that is, risks that require special audit consideration14).  For example, a component could be responsible for foreign exchange trading and thus expose the group to a significant risk of material misstatement, even though the component is not otherwise of individual financial significance to the group.

194.           Existing footnote 17 of paragraph A23 is amended to read as follows:

See ASA 315, paragraphs A17-A41A27–A73.

195.           Existing footnote 19 of paragraph A28 is amended to read as follows:

See ASA 240, paragraph 1516; and ASA 315, paragraph 1017.

196.           Existing paragraph 1 of Appendix 2 is amended to read as follows:

Group-wide controls may include a combination of the following:

           * Regular meetings between group and component management to discuss business developments and to review performance.

…

           * Controls activities within an IT system that is common for all or some components.

           * Controls within