Document ID: chunk:federal_register_of_legislation:F2023C01125:body:0:p10
Version: federal_register_of_legislation:F2023C01125
Segment Type: other
Provision Reference: 
Character Range: 27302–30520

specific disclosures required of the entity in the financial report or they may prescribe the applicable financial reporting framework.  They may also establish certain legal rights and obligations of the entity, some of which will be recognised in the entity's financial report.  In addition, laws and regulations may impose penalties in cases of non‑compliance.

A2.             The following are examples of the types of policies and procedures an entity may implement to assist in the prevention and detection of non‑compliance with laws and regulations:

           * Monitoring legal requirements and ensuring that operating procedures are designed to meet these requirements.

           * Instituting and operating appropriate systems of internal control.

           * Developing, publicising and following a code of conduct.

           * Ensuring employees are properly trained and understand the code of conduct.

           * Monitoring compliance with the code of conduct and acting appropriately to discipline employees who fail to comply with it.

           * Engaging legal advisors to assist in monitoring legal requirements.

           * Maintaining a register of significant laws and regulations with which the entity has to comply within its particular industry and a record of complaints.

    In larger entities, these policies and procedures may be supplemented by assigning appropriate responsibilities to the following:

           * An internal audit function.

           * An audit committee.

           * A compliance function.

Responsibility of the Auditor

A3.             Non‑compliance by the entity with laws and regulations may result in a material misstatement of the financial report.  Detection of non‑compliance, regardless of materiality, may affect other aspects of the audit including, for example, the auditor's consideration of the integrity of management, those charged with governance or employees.

A4.             Whether an act constitutes non‑compliance with laws and regulations is a matter to be determined by a court or other appropriate adjudicative body, which is ordinarily beyond the auditor's professional competence to determine.  Nevertheless, the auditor's training, experience and understanding of the entity and its industry or sector may provide a basis to recognise that some acts, coming to the auditor's attention, may constitute non‑compliance with laws and regulations.

A5.             In accordance with specific statutory requirements, the auditor may be specifically required to report, as part of the audit of the financial report, on whether the entity complies with certain provisions of laws or regulations.  In these circumstances, ASA 700[9] or ASA 800[10] deal with how these audit responsibilities are addressed in the auditor's report.  Furthermore, where there are specific statutory reporting requirements, it may be necessary for the audit plan to include appropriate tests for compliance with these provisions of the laws and regulations.

Categories of Laws and Regulations (Ref: Para. 6)

A6.             The nature and circumstances of the entity may impact whether relevant laws and regulations are within the categories of