The Auditor’s Consideration of CompliancThe Auditor’s Consideration of Compliance with Laws and Regulations

The Auditor’s Consideration of Compliance with Laws and Regulations

1. As part of obtaining an understanding of the entity and its environment in accordance with ASA 315,[4] the auditor shall obtain a general understanding of:
   1. The legal and regulatory framework applicable to the entity and the industry or sector in which the entity operates; and
   2. How the entity is complying with that framework.
      (Ref: Para. A7)
2. The auditor shall obtain sufficient appropriate audit evidence regarding compliance with the provisions of those laws and regulations generally recognised to have a direct effect on the determination of material amounts and disclosures in the financial report. (Ref: Para. A8)
3. The auditor shall perform the following audit procedures to help identify instances of non-compliance with other laws and regulations that may have a material effect on the financial report:
   (Ref: Para. A9-A10)
   1. Enquiring of management and, where appropriate, those charged with governance, as to whether the entity is in compliance with such laws and regulations; and
   2. Inspecting correspondence, if any, with the relevant licensing or regulatory authorities.
4. During the audit, the auditor shall remain alert to the possibility that other audit procedures applied may bring instances of
   non-compliance or suspected non-compliance with laws and regulations to the auditor’s attention. (Ref: Para. A11-Aus A11.1)
5. The auditor shall request management and, where appropriate, those charged with governance, to provide written representations that all known instances of non-compliance or suspected non-compliance with laws and regulations whose effects should be considered when preparing the financial report have been disclosed to the auditor. (Ref: Para. A12)
6. In the absence of identified or suspected non-compliance, the auditor is not required to perform audit procedures regarding the entity’s compliance with laws and regulations, other than those set out in paragraphs 12-16 of this Auditing Standard.