Amendments to ASA 720

Amendments to ASA 720

1. Existing paragraph A31 is amended to read as follows:

The auditor’s knowledge obtained in the audit includes the auditor’s understanding of the entity and its environment, the applicable financial reporting framework, and including the entity’s system of internal control, obtained in accordance with ASA 315.[11] ASA 315 sets out the auditor’s required understanding, which includes such matters as obtaining an understanding of:

1. The entity’s organisational structure, ownership and governance, and its business model, including the extent to which the business model integrates the use of IT;
2. The rRelevant industry, regulatory, and other external factors;
3. The relevant measures used, internally and externally, to assess measurement and review of the entity’s financial performance; and

Australian crest, with text naming the Australian Government and the Auditing and Assurance Standards Board (e) The nature of the entity;

(f) The entity’s selection and application of accounting policies;

(g) The entity’s objectives and strategies;

1. Existing paragraph A51 is amended to read as follows:

In reading the other information, the auditor may become aware of new information that has implications for:

 The auditor’s understanding of the entity and its environment, the financial reporting framework and the entity’s system of internal control and, accordingly, may indicate the need to revise the auditor’s risk assessment.[13]