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CS Professional · Compliance Management, Audit and Due Diligence · Audit Process and Documentation

While auditing Sundaram Pharma Ltd, the audit team records its risk assessment. Which set of items must the auditor document under SA 315 as part of the understanding of the entity and its internal control?

The auditor must document key elements of the understanding obtained about the entity, its environment and internal control components, the sources of information used, and the risk assessment procedures performed. Risks identified and assessed are documented as well, so documenting only assertion-level risks is insufficient.

  1. AOnly the final audit opinion and the fee agreed
  2. BKey elements of the understanding obtained, the sources of information, and the risk assessment procedures performedCorrect
  3. COnly the identified risks at assertion level, without the sources of information
  4. DThe client's board minutes copied in full

Explanation

SA 315 requires documentation of key elements of the understanding obtained about the entity and its environment and internal control components, the sources of information from which it was obtained, and the risk assessment procedures performed. Option C is incomplete as it omits sources and procedures.

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