Document ID: chunk:federal_register_of_legislation:F2020L00252:body:0:p9
Version: federal_register_of_legislation:F2020L00252
Segment Type: other
Provision Reference: 
Character Range: 24923–28047

For purposes of specifying additional considerations to audits of smaller entities, a "smaller entity" refers to an entity which typically possesses qualitative characteristics such as:

    …

     (b) One or more of the following:

    …

         (iv) Simpler systems of Few internal controls;

    …

28.               The sub-heading Considerations Specific to Automated Tools and Techniques is inserted following existing paragraph Aus A68.1 of this Auditing Standard. The following paragraph A72 is then inserted following this sub-heading.

    The considerations specific to "automated tools and techniques" included in some ASAs (for example, ASA 315) have been developed to explain how the auditor may apply certain requirements when using automated tools and techniques in performing audit procedures.

Amendments to ASA 210

29.               Existing footnote 14 in paragraph A16 is amended to read as follows:

See ASA 315 Identifying and Assessing the Risks of Material Misstatement through Understanding the Entity and Its Environment, Appendix 3 paragraph 22paragraph A54.

30.               Existing paragraph A18 is amended to read as follows:

    It is for management to determine what internal control is necessary to enable the preparation of the financial report.  The term "internal control" encompasses a wide range of activities within components of the system of internal control that may be described as the control environment; the entity's risk assessment process; the entity's process to monitor the system of internal control, the information system, including the related business processes relevant to financial reporting, and communication; and control activities; and monitoring of controls.  This division, however, does not necessarily reflect how a particular entity may design, implement and maintain its internal control, or how it may classify any particular component.[15] An entity's internal control (in particular, its accounting books and records, or accounting systems) will reflect the needs of management, the complexity of the business, the nature of the risks to which the entity is subject, and relevant laws or regulation.

Amendments to ASA 230

31.               Existing footnote 5 in paragraph A7 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 1710.

32.               Existing footnote 6 in paragraph A8 is amended to read as follows:

See ASA 315, paragraph 4(e)12(l).

33.               Existing paragraph A17 is amended to read as follows:

    When preparing audit documentation, the auditor of a smaller entity may also find it helpful and efficient to record various aspects of the audit together in a single document, with cross-references to supporting working papers as appropriate.  Examples of matters that may be documented together in the audit of a smaller entity include the understanding of the entity and its environment, the applicable financial reporting framework, and the entity's system of internal control, the overall