Document ID: chunk:federal_register_of_legislation:F2023C01124:reg:17:p17
Version: federal_register_of_legislation:F2023C01124
Segment Type: reg
Provision Reference: reg 17 (pt 17/41)
Character Range: 58564–61655

* Employees involved in initiating, processing or recording complex or unusual transactions and those who supervise or monitor such employees.

           * In‑house legal counsel.

           * Chief ethics officer or equivalent person.

           * The person or persons charged with dealing with allegations of fraud.

A18.         Management is often in the best position to perpetrate fraud.  Accordingly, when evaluating management's responses to enquiries with an attitude of professional scepticism, the auditor may judge it necessary to corroborate responses to enquiries with other information.

Enquiries of the Internal Audit Function (Ref: Para. 20)

A19.         ASA 315 and ASA 610 establish requirements and provide guidance relevant to audits of those entities that have an internal audit function.[17]  In carrying out the requirements of those Auditing Standards in the context of fraud, the auditor may enquire about specific activities of the function including, for example:

           * The procedures performed, if any, by the internal audit function during the year to detect fraud.

           * Whether management has satisfactorily responded to any findings resulting from those procedures.

Obtaining an Understanding of Oversight Exercised by Those Charged With Governance (Ref: Para. 21)

A20.         Those charged with governance of an entity oversee the entity's systems for monitoring risk, financial control and compliance with the law.  In many circumstances, corporate governance practices are well developed and those charged with governance play an active role in oversight of the entity's assessment of the risks of fraud and the controls that address such risks.  Since the responsibilities of those charged with governance and management may vary by entity and by the circumstances, it is important that the auditor understands their respective responsibilities to enable the auditor to obtain an understanding of the oversight exercised by the appropriate individuals.[18]

A21.         An understanding of the oversight exercised by those charged with governance may provide insights regarding the susceptibility of the entity to management fraud, the adequacy of controls that address risks of fraud, and the competency and integrity of management.  The auditor may obtain this understanding in a number of ways, such as by attending meetings where such discussions take place, reading the minutes from such meetings or making enquiries of those charged with governance.

Considerations Specific to Smaller Entities

A22.         In some cases, all of those charged with governance are involved in managing the entity.  This may be the case in a small entity where a single owner manages the entity and no one else has a governance role.  In these cases, there is ordinarily no action on the part of the auditor because there is no oversight separate from management.

Consideration of Other Information (Ref: Para. 24)

A23.         In addition to information obtained from applying analytical procedures, other information obtained about the