Auditing Standard ASA 315 Identifying and Assessing the Risks of Material Misstatement
Understanding the Entity’s System of IntUnderstanding the Entity’s System of Internal Control
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Understanding the Entity’s System of Internal Control
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The entity’s system of internal control may be reflected in policy and procedures manuals, systems and forms, and the information embedded therein, and is effected by people. The entity’s system of internal control is implemented by management, those charged with governance, and other personnel based on the structure of the entity. The entity’s system of internal control can be applied, based on the decisions of management, those charged with governance or other personnel and in the context of legal or regulatory requirements, to the operating model of the entity, the legal entity structure, or a combination of these.
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This appendix further explains the components of, as well as the limitations of, the entity’s system of internal control as set out in paragraphs 12(m), 21–26, and A90–A181, as they relate to a financial report audit.
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Included within the entity’s system of internal control are aspects that relate to the entity’s reporting objectives, including its financial reporting objectives, but it may also include aspects that relate to its operations or compliance objectives, when such aspects are relevant to financial reporting.
| Example:Controls over compliance with laws and regulations may be relevant to financial reporting when such controls are relevant to the entity’s preparation of disclosures of contingencies in the financial report. |
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