Document ID: chunk:federal_register_of_legislation:F2023C01130:body:0:p10
Version: federal_register_of_legislation:F2023C01130
Segment Type: other
Provision Reference: 
Character Range: 28900–33181

Para. A111‒A113)
         (iii)             Addressing those risks;

23.               If the auditor identifies risks of material misstatement that management failed to identify, the auditor shall:

(a)                Determine whether any such risks are of a kind that the auditor expects would have been identified by the entity's risk assessment process and, if so, obtain an understanding of why the entity's risk assessment process failed to identify such risks of material misstatement; and

(b)                Consider the implications for the auditor's evaluation in paragraph 22(b).

The entity's process to monitor the system of internal control
24.               The auditor shall obtain an understanding of the entity's process for monitoring the system of internal control relevant to the preparation of the financial report, through performing risk assessment procedures, by: (Ref: Para. A114–A115)
    (a)                Understanding those aspects of the entity's process that address:                                                                                                                                                                                       and
                                                                                                                                                                                                                                                                                   (c)                Evaluating whether the entity's process for monitoring the system of internal control is appropriate to the entity's circumstances considering the nature and complexity of the entity.  (Ref: Para. A121‒A122)
         (i)                 Ongoing and separate evaluations for monitoring the effectiveness of controls, and the identification and remediation of control deficiencies identified; (Ref: Para. A116‒A117) and

         (ii)                 The entity's internal audit function, if any, including its nature, responsibilities and activities; (Ref: Para. A118)

    (b)                Understanding the sources of the information used in the entity's process to monitor the system of internal control, and the basis upon which management considers the information to be sufficiently reliable for the purpose; (Ref: Para. A119‒A120)

Information System and Communication, and Control Activities (Ref: Para. A123–A130)

The information system and communication
25.               The auditor shall obtain an understanding of the entity's information system and communication relevant to the preparation of the financial report, through performing risk assessment procedures, by: (Ref: Para. A131)
    (a)                Understanding the entity's information processing activities, including its data and information, the resources to be used in such activities and the policies that define, for significant classes of transactions, account balances and disclosures: (Ref: Para. A132‒A143)  and
                                                                                                                                                                                                                                                                                                          (c)                Evaluating whether the entity's information system and communication appropriately support the preparation of the entity's financial report in accordance with the applicable financial reporting framework. (Ref: Para. A146)
         (i)                 How information flows through the entity's information system, including how:

              1. Transactions are initiated, and how information about them is recorded, processed, corrected as necessary, incorporated in the general ledger and reported in the financial report; and

               2. Information about events and conditions, other than transactions, is captured, processed and disclosed in the financial report;

         (ii)               The accounting records, specific accounts in the financial report and other supporting records relating to the flows of information in the information system;

         (iii)             The financial reporting process used to prepare the entity's financial report,