Scope of application
- This Auditing Standard specifies and guides the auditor's responsibility and auditing firms (hereinafter referred to as "auditors") when reviewing Compliance laws and regulations of the audited entity in the financial statement audit process. This Auditing Standard does not apply to other guarantees for which the auditor separately examines and reports on the entity's compliance with specific laws and regulations.
Influence of laws and regulations
- The impact of laws and regulations on financial reporting can vary considerably. The laws and regulations governing the activities of the entity constitute the relevant legal and regulatory framework. The provisions of certain laws and regulations directly affect the financial statements by requiring that the amounts and disclosures be disclosed in the entity's financial statements. Certain other laws and regulations require management to comply or contain provisions that require the entity to comply in the course of its operations, but do not directly affect the entity's financial statements. Some audited entities operate in industries subject to many laws (such as banking, securities, insurance or chemical companies ...). Others are only affected by certain laws and regulations relating to general operations (such as laws and regulations related to occupational health and safety and equal employment opportunity). Failure to comply with laws and regulations may result in fines, litigation, or other consequences that could materially affect the financial statements.
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