Wiley Practitioner's Guide to GAAS 2015: Covering all SASs, SSAEs, SSARSs, PCAOB Auditing Standards, and Interpretations

AU-C 250 Consideration of Laws and Regulations in an Audit of Financial Statements

AU-C ORIGINAL PRONOUNCEMENT

Original Pronouncement

Statement on Auditing Standards (SAS) 122.

AU-C 250 DEFINITION OF TERM

Source: AU-C 250.11

Noncompliance. 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. Noncompliance does not include personal misconduct (unrelated to the business activities of the entity) by those charged with governance, management, or employees of the entity.

OBJECTIVES OF AU SECTION 250

AU-C 250.10 states that:

… the objectives of the auditor are to

1. obtain sufficient appropriate audit evidence regarding material amounts and disclosures in the financial statements that are determined by the provisions of those laws and regulations generally recognized to have a direct effect on their determination (see paragraph .06a),
2. perform specified audit procedures that may identify instances of noncompliance with other laws and regulations that may have a material effect on the financial statements (see paragraph .06b), and
3. respond appropriately to noncompliance or suspected noncompliance with laws and regulations identified during the audit.

FUNDAMENTAL REQUIREMENTS

Auditor's Responsibilities

Noncompliance with laws and ...