Document ID: chunk:federal_register_of_legislation:F2022C01189:reg:7:p10
Version: federal_register_of_legislation:F2022C01189
Segment Type: reg
Provision Reference: reg 7 (pt 10/21)
Character Range: 35579–38816

control.

Analytical Procedures

A25.         Analytical procedures consist of evaluations of financial information through analysis of plausible relationships among both financial and non‑financial data.  Analytical procedures also encompass such investigation as is necessary of identified fluctuations or relationships that are inconsistent with other relevant information or that differ from expected values by a significant amount.  See ASA 520 for further guidance.

Enquiry

A26.         Enquiry consists of seeking information of knowledgeable persons, both financial and non‑financial, within the entity or outside the entity.  Enquiry is used extensively throughout the audit in addition to other audit procedures.  Enquiries may range from formal written enquiries to informal oral enquiries.  Evaluating responses to enquiries is an integral part of the enquiry process.

A27.         Responses to enquiries may provide the auditor with information not previously possessed or with corroborative audit evidence.  Alternatively, responses might provide information that differs significantly from other information that the auditor has obtained, for example, information regarding the possibility of management override of controls.  In some cases, responses to enquiries provide a basis for the auditor to modify or perform additional audit procedures.

A28.         Although corroboration of evidence obtained through enquiry is often of particular importance, in the case of enquiries about management intent, the information available to support management's intent may be limited.  In these cases, understanding management's past history of carrying out its stated intentions, management's stated reasons for choosing a particular course of action, and management's ability to pursue a specific course of action may provide relevant information to corroborate the evidence obtained through enquiry.

A29.         In respect of some matters, the auditor may consider it necessary to obtain written representations from management and, where appropriate, those charged with governance to confirm responses to oral enquiries.  See ASA 580 for further guidance.[15]

Information to Be Used as Audit Evidence

Relevance and Reliability (Ref: Para. 7)

A30.         As noted in paragraph A5, while audit evidence is primarily obtained from audit procedures performed during the course of the audit, it may also include information obtained from other sources, for example, previous audits, through the information obtained by the firm in the acceptance or continuance of the client relationship or engagement and in complying with certain additional responsibilities under law, regulation or relevant ethical requirements (e.g., regarding an entity's non-compliance with laws and regulations).  The quality of all audit evidence is affected by the relevance and reliability of the information upon which it is based.

Relevance

A31.         Relevance deals with the logical connection with, or bearing upon, the purpose of the audit procedure and, where appropriate, the assertion under consideration.  The relevance of information to be used as audit evidence may be affected by the direction of testing.  For example, if the