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A92216 1 (2010-11-01)

handle is hein.gao/gaobadvxn0001 and id is 1 raw text is: i ~G A 0 Acountabiity I Integrity * Reliability United States Government Accountability Office Washington, DC 20548 November 1, 2010 International Auditing and Assurance Standards Board 545 Fifth Avenue, 14th Floor New York, New York 10017 USA Subject: International Auditing and Assurance Standards Board (JAASB) July 2010 Exposure Draft on Proposed International Standards on Auditing (ISA) 315 (Revised), Identifying and Assessing the Risks of Material Misstatement through Understanding the Entity and Its Environment and ISA 610 (Revised), Using the Work of Internal Auditors. This letter provides the U.S. Government Accountability Office's (GAO) comments on the JAASB's proposed revisions to the ISAs on identifying and assessing the risk of material misstatement and using the work of internal auditors. We agree with the changes made by the Board and we support the proposed standards. ISA 315 We believe that the proposed revisions to ISA 315 will help clarify the auditor's responsibility with regard to identifying and assessing risks of material misstatements through understanding the entity and its environment. We especially support the JAASB's position of requiring that the auditor inquire of appropriate individuals within the internal audit function as part of the risk assessment process. This will further inform the external auditor's understanding of the entity and its environment, which forms the basis of the risk assessment. Also, it encourages effective communication between the internal auditors and the external auditors which supports an environment in which internal auditors can bring significant matters that may affect the work of the external auditor to the external auditor's attention. While we support the revisions to ISA 315, we suggest including a section in ISA 315 that addresses special considerations for the audit of public sector entities. This consideration for governmental entities would be referenced to paragraph 6(a) of ISA 315 and would provide important guidance on the broader audit objectives in audits of government entities that use the work of internal auditors. We suggest wording this government consideration as follows:

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