The requirements and application guidance for ‘Obtaining an Understanding of the Entity and Its Environment, the Applicable Financial Reporting Framework and the Entity’s System of Internal Control’ are extensive and challenging. Experience has shown that auditors often struggle to understand clients and their business models. Descriptions are often too general for a meaningful appreciation, and documentation is barely adequate to understand the business and how relevant standards should be applied.
This session addresses:
- Why knowing the client is so important
- How to obtain such knowledge
- Key elements – organisational structure and ownership, governance, business model, external factors, performance measures (Appendix 1)
- How inherent risk factors affect susceptibility of assertions to misstatement (Appendix 2), and
- Documentation.
