SA-315 Identifying and Assessing the Risk of Material Misstatements through Understanding the Entity and its Environment
SA-315 Identifying and Assessing the Risk of Material Misstatements through Understanding the Entity and its Environment An entity’s environment, both internal and external, poses many threats that lead to entity’s financial information being misstated materially. SA 315 enables the auditor to identify and assess the risk of material misstatement, whether due to fraud or error in an entity’s financial statements and design and implement appropriate responses & procedures which will reduce such risk to an acceptably low level. Overview 1. Understanding of the entity and its environment : The auditor shall obtain an understanding of: The relevant industry, regulatory and other external factors including applicable FRF. The nature of the entity including its operations, ownership and governance, investments made and planned by the entity and structure and finance of the entity. Accounting policies ap