Document ID: chunk:federal_register_of_legislation:F2016C00028:reg:26:p9
Version: federal_register_of_legislation:F2016C00028
Segment Type: reg
Provision Reference: reg 26 (pt 9/47)
Character Range: 32111–35247

the financial report where special audit consideration may be necessary, for example: related party transactions, or management assessment of the entity's ability to continue as a going concern , or when considering the business purpose of transactions;

           * Developing expectations for use when performing analytical procedures;

           * Responding to the assessed risks of material misstatement, including designing and performing further audit procedures to obtain sufficient appropriate audit evidence; and

           * Evaluating the sufficiency and appropriateness of audit evidence obtained, such as the appropriateness of assumptions and of management's oral and written representations.

A2.             Information obtained by performing risk assessment procedures and related activities may be used by the auditor as audit evidence to support assessments of the risks of material misstatement.  In addition, the auditor may obtain audit evidence about classes of transactions, account balances, or disclosures and related assertions and about the operating effectiveness of controls, even though such procedures were not specifically planned as substantive procedures or as tests of controls.  The auditor also may choose to perform substantive procedures or tests of controls concurrently with risk assessment procedures because it is efficient to do so.

A3.             The auditor uses professional judgement to determine the extent of the understanding required.  The auditor's primary consideration is whether the understanding that has been obtained is sufficient to meet the objective stated in this Auditing Standard.  The depth of the overall understanding that is required by the auditor is less than that possessed by management in managing the entity.

A4.             The risks to be assessed include both those due to error and those due to fraud, and both are covered by this Auditing Standard.  However, the significance of fraud is such that further requirements and guidance are included in ASA 240, in relation to risk assessment procedures and related activities to obtain information that is used to identify the risks of material misstatement due to fraud.[4]

A5.             Although the auditor is required to perform all the risk assessment procedures described in paragraph 6 in the course of obtaining the required understanding of the entity (see paragraphs 11-24), the auditor is not required to perform all of them for each aspect of that understanding.  Other procedures may be performed where the information to be obtained therefrom may be helpful in identifying risks of material misstatement.  Examples of such procedures include:

           * Reviewing information obtained from external sources such as trade and economic journals; reports by analysts, banks, or rating agencies; or regulatory or financial publications.

           * Making enquiries of the entity's external legal counsel or of valuation experts that the entity has used.

Enquiries of Management, the Internal Audit Function and Others within the Entity (Ref: Para. 6(a))

A6.             Much of the