| 22. | The auditor shall obtain an understanding of the major activities that the entity uses to monitor internal control over financial reporting, including those related to those control activities relevant to the audit, and how the entity initiates remedial actions to deficiencies in its controls. (Ref: Para. A98-A100) |
| 23. | If the entity has an internal audit function,1 the auditor shall obtain an understanding of the following in order to determine whether the internal audit function is likely to be relevant to the audit: |
| (a) | The nature of the internal audit function's responsibilities and how the internal audit function fits in the entity's organizational structure; and |
| (b) | The activities performed, or to be performed, by the internal audit function. (Ref: Para. A101-A103) |
| 24. | The auditor shall obtain an understanding of the sources of the information used in the entity's monitoring activities, and the basis upon which management considers the information to be sufficiently reliable for the purpose. (Ref: Para. A104) |
| 1 The term "internal audit function" is defined in ISA (UK and Ireland) 610, "Using the Work of Internal Auditors," paragraph 7(a), as: "An appraisal activity established or provided as a service to the entity. Its functions include, amongst other things, examining, evaluating and monitoring the adequacy and effectiveness of internal control." |
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