Page 174 - Internal Auditing Standards

Guide to Using International Standards on Auditing in the Audits of Small- and Medium-Sized Entities Volume 1—Core Concepts

15.2 ISA 250 — Consideration of Laws and Regulations in an Audit of Financial Statements

Exhibit 15.2-1

Understand: Determine instances of non-compliance
t Legal/regulatory framework and
Risk Assessment and regulations. Risk Response documents, inquiring of management,
through audit procedures such as reading
its industry/sector.
t How entity is complying with
and substantive tests.
framework.
Determine the nature of any non-
Inquire about compliance with laws
compliance, discuss with management
Inspect correspondence with
statements.
licensing and regulatory authorities. and evaluate impact on the financial

Have instances of material non-compliance
been appropriately disclosed in the financial
Reporting Report to management and those charged
statements?

with governance.
Obtain management representations.

Paragraph # ISA Objective(s)
250.10 The objectives of the auditor are:
(a) To obtain sufficient appropriate audit evidence regarding compliance with the provisions

of those laws and regulations generally recognized to have a direct effect on the
determination of material amounts and disclosures in the fi nancial statements;

(b) To perform specified audit procedures to help identify instances of non-compliance with

other laws and regulations that may have a material effect on the financial statements; and
(c) To respond appropriately to non-compliance or suspected non-compliance with laws and

regulations identified during the audit.

Paragraph # Relevant Extracts from ISAs
250.11 For the purposes of this ISA, the following term has the meaning attributed below:
Non-compliance—Acts of omission or commission by the entity, either intentional or
unintentional, which are contrary to the prevailing laws or regulations. Such acts include
transactions entered into by, or in the name of, the entity, or on its behalf, by those charged
with governance, management or employees. Non-compliance does not include personal
misconduct (unrelated to the business activities of the entity) by those charged with
governance, management or employees of the entity.

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