Document ID: chunk:federal_register_of_legislation:F2025L00107:front:0:p146
Version: federal_register_of_legislation:F2025L00107
Segment Type: other
Provision Reference: 
Character Range: 457957–461284

sufficient precision and clarity to enable the identification and assessment of the risks relating to the objectives;

 2.                 Identified the risks to achieving the entity's objectives and analysed the risks as a basis for determining how the risks should be managed; and

 3.                 Considered the potential for fraud when considering the risks to achieving the entity's objectives.

     1.

 2.       If the practitioner identifies risks that the entity failed to identify, and those risks are of a kind that the practitioner expects would have been identified by the entity's risk assessment process, it may be an indicator that the entity's risk assessment process is not appropriate to the entity's circumstances.

The Entity's Process for Monitoring the System of Internal Control (Ref: Para. 116L, 116R)

 1.       Understanding the results of the entity's process for monitoring the system of internal control may assist the practitioner in:

         1.                 Identifying and assessing risks of material misstatement in the disclosures;

         2.                 Obtaining an understanding of the sustainability matters and other engagement circumstances; and

         3.                 Determining whether to obtain evidence from testing controls.

 2.       Understanding the results of the entity's process for monitoring the system of internal control may provide information about deficiencies in controls; however, the absence of results of the entity's process for monitoring the system of internal control does not necessarily indicate that controls are operating effectively. The absence of results may be indicative of an ineffective process for monitoring the system of internal control.

A371R. Understanding the entity's process for monitoring the system of internal control relevant to the preparation of the sustainability information may involve understanding:

 1.                 Those aspects of the entity's process that address:

         1.                  Ongoing and separate evaluations for monitoring the effectiveness of controls, and the identification and remediation of control deficiencies identified; and

         2.                The entity's internal audit function, if any, including its nature, responsibilities, and activities; and

 2.                 The sources of 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.

A372R. The practitioner's evaluation of the entity's process for monitoring the system of internal control assists the practitioner in understanding the other components of the entity's system of internal control. This evaluation may also assist the practitioner with identifying and assessing risks of material misstatement at the assertion level for the disclosures.

A373R. Matters that may be relevant for the practitioner to consider when understanding how the entity monitors its system of internal control include:

 1.                 The design of the monitoring activities, for example, whether it is periodic or ongoing monitoring;

 2.                 The performance and frequency of the monitoring activities;

 3.                 The evaluation of the results of the