Document ID: chunk:federal_register_of_legislation:F2020L00252:body:0:p29
Version: federal_register_of_legislation:F2020L00252
Segment Type: other
Provision Reference: 
Character Range: 81332–84574

part of a user entity's information system, including related business processes, relevant to financial reporting if these services affect any of the following:

(a)                How information relating to significant classes of transactions, account balances and disclosures flows through the user entity's information system, whether manually or using IT, and whether obtained from within or outside the general ledger and subsidiary ledgers. The classes of transactions in the user entity's operations that are significant to the user entity's financial report; This includes when the service organisation's services affect how:

             (i)                 (b) The procedures, within both information technology (IT) and manual systems, by which the user entity's transactions are initiated, recorded, processed, corrected as necessary, transferred to the general ledger and reported in the financial report; Transactions of the user entity are initiated, and how information about them is recorded, processed, corrected as necessary, and incorporated in the general ledger and reported in the financial report; and

             (ii)               Information about events or conditions, other than transactions, is captured, processed and disclosed by the user entity in the financial report.

(b)                (c) The related accounting records, either in electronic or manual form, supporting information and specific accounts in the user entity's financial report and other supporting records relating to the flows of information in paragraph 3(a)that are used to initiate, record, process and report the user entity's transactions; this includes the correction of incorrect information and how information is transferred to the general ledger;

    (d)   How the user entity's information system captures events and conditions, other than transactions, that are significant to the financial report;

         (ce) The financial reporting process used to prepare the user entity's financial report from the records described in paragraph 3(b), including as it relates to disclosures and to accounting estimates relating to significant classes of transactions, account balances and disclosures accounting estimates and disclosures; and

     (d) The entity's IT environment relevant to (a) to (c) above.

(f)    Controls surrounding journal entries, including non-standard journal entries used to record non-recurring, unusual transactions or adjustments.

…

111.           Existing paragraph 7 is amended to read as follows:

The objectives of the user auditor, when the user entity uses the services of a service organisation, are:

(a)                To obtain an understanding of the nature and significance of the services provided by the service organisation and their effect on the user entity's system of internal control relevant to the audit, sufficient to provide an appropriate basis for the identification and assessment of identify and assess the risks of material misstatement; and

(b)                To design and perform audit procedures responsive to those risks.

…

112.           Footnote 3 in paragraph 9 is amended to read as follows:

See ASA 315, paragraph 1119.

113.           Existing paragraph