Bronfenbrenner ecological theory of development Essay Example

Bronfenbrenner ecological theory of development Essay Example Bronfenbrenner ecological theory of development Paper Bronfenbrenner ecological theory of development Paper Bronfenbrenner ecological system theory is one of the most frequently cited development models of our times. Its wide spread acceptance is in part due to varied solutions that it offers to complicated social and community problems (Damon Lerner, 2006). The theory revolves around the development of child and the impact of seemingly intertwined social issues on individual personality traits. It hypotheses that children are impacted by their immediate environment such as family, school or friends while factors including health, religious teachings and economy are all interrelated to effect the overall lifestyle. Although the impact of immediate environment is the strongest but it can be mitigated by another more powerful event in life (Cocking and Renninger, 1993). The five systems, as described by Bronfenbrenner are Microsystems, Mesosystem, Exosystem, Macrosystem and Chronosystem. The impact of most important setting is explained by Microsystem which includes the family, peer, school and neighbourhood. Although there is no set pattern or limit to the level of influence that any one system may exhibit, Microsystem is considered most influential. Bronfenbrenner levels of influence on personal development My family has had great influence in shaping my development and aspirations. Since my childhood, my parents took it upon themselves to train and emphasize the importance of cultural values. I was brought up in an environment where tradition and religion dictated every aspect of personal life. It seemed that the Church played a pivotal role in further strengthening the beliefs and faith associated with a traditional Christian America. As a child, my early memories evoke a picture of strict adherence to Christian faith as I accompanied my mother and other female relatives on occasional Church activities. Furthermore, a close knit family fostered the development of strong family ties that encouraged participation in family events and exchange of gifts. Such was the emphasis on attending important family events that my family still somehow manages to attend various ceremonies in spite of the hardship to travel long distances. It will not be an oversimplification to suggest that these strong relationships fostered a sense of unity where every member of family garners support from other well established members of this group. I have seen several of my Cousins and Uncles getting financial support as well as help with finding jobs, guidance and medical treatments. Even Bronfenbrenner himself suggest that there is a need for American families to live close enough to rely on each other. He advises that living together will enhance our chances of supporting young parents and elders (Boemmel Briscoe, 2001). On the contrary, such affection adversely affected my lifestyle at school where it was almost difficult for me to adjust in Kindergarten and early grades. The primary reason for such an anomaly can be attributed to the fact that my initial upbringing was done with care and affection from Parents, Uncles and Aunts which made it difficult for me to take dictation from someone else, who was initially a stranger to me. The trend continued throughout my school life where I made only a few trusted friends as my personality became accustomed to making friends based on my own perception of trust. I was brought up in a middle class neighbourhood where residents from several different cultures lived together in harmony. Such peaceful coexistence further strengthened my belief of camaraderie and looking towards family and friends for help. The overall circumstances and a relatively peaceful environment assisted me in developing unbiased attitudes towards people of different faith, cultures, race and gender. I was also fortunate to have the teachers and mentors who helped me envision a better world without the myths and controversies usually associated with people of different lifestyle. Regular family functions promoted active participation in healthy activities which kept us away from being attracted by events in media. I still have a vague memory of watching cartoons and such popular TV shows as Sesame Street but TV time was strictly scheduled by parents who oversaw the selection of every thing being watched. Where such an attitude fostered the ideas of ethical viewing it also provided a yearning to resist the commands which to me were conflicting with the freedom that I intended. Strict adherence to rules invoked a personality conflict that later developed into doing things that had more detrimental results. It included getting into brawls, frequent mood swings and apathy from taking orders. These attitudes first developed at the age of seven, which my parents misunderstood as ADHD Attention Deficit Hyper Disorder. I also remembered to be given certain medications for a few months followed by frequent visits to the therapist. Fortunately, one of my extended family members is a medical professional who specialises in the area of child medicine. He was also accustomed to our family life therefore he was able to convince my parents that such traits are normal in boys transitioning to teenage and should not be taken seriously. Due to lack of solid data on ADHD and a strong debate surrounding the effective treatment, my family stopped any further treatment. I am not a fervent reader nor do I remember studying many books but it seems habitual that I skim through newspapers and magazine articles to keep myself updated with major events unfolding around me. Such habits have encouraged me to critically analyse events and reports without being overwhelmed by the tone of the writer. Furthermore, I understand that events unfolding around the World and global economic meltdown has made it difficult for many to make a substantial living but it should be understood that the recession is cyclical and United States still provides opportunities which are far superior to any that other people around the World can ever get. Bronfenbrenner theory graduate school Most of my family has worked hard to achieve their goals and education has assisted most of them to achieve their objectives. Since my childhood, I have seen most of my family members enjoying a privilege of holding at least a high school diploma. Nowadays, a high school diploma may not mean much to our generation but three to four decades earlier it could land someone a reasonable blue collar job. I was always taught about the virtues of getting quality education. I remember that my grandfather used to appreciate and encourage young people to attend educational seminars and events. His thoughts were based on the philosophy that education does not merely provide the knowledge to understand the facts but instead it teaches to differentiate between fact and fiction. I think that these ideas are deeply imbedded in my conscience which has helped me to develop a better understanding of the environment around me. While such an opinion has definitely helped me to pursue higher education, it has also set me back in achieving greater results from education. Following the philosophy of my grandfather, I always tried to understand the basics without evaluating everything in detail. I have been so overwhelmed by the idea of details that it has made it relatively difficult for me to grasp detailed guidelines. I am moulded to appreciate simple and least complex items. Nevertheless, I was never forced to get a higher degree. Enrolling in a Master’s Program is my own decision which has primarily resulted from the teaching of my elders and to a lesser degree for gaining financial prosperity. As discussed, I was fortunate enough to get good teachers who were a role model of a successful social person. It can be assumed that one of the other reasons to continue a Master’s degree might be an urge to remain close to people who exude an image of higher intellect than the society. Although gaining financial prosperity is my secondary aim but I must confess that my decision to get a Master’s degree is also dictated by fears of an insecure future without the financial freedom that an average person craves for. Due to the fact that my extended family acts as a closely knit unit, several of my Cousins and Uncles have themselves gone to earn continuing education credits. I think I am also afraid to face the criticism of my family for not striving for a higher degree when most of my cousins are already planning to do so. In this regard, I consider myself lucky to be among a fortunate few to be bestowed with some of the best educational systems in the World. To me, it will be an injustice to myself for not grasping this opportunity and implement its wisdom to utilize my knowledge for the betterment of human kind. I personally think that Bronfenbrenner theory helps define almost every aspect of my life and it advocates looking at interrelated parameters to find a plausible solution to problems. References Boemmel, J Briscoe J (2001 May 9). Web Quest Project Theory Fact Sheet of Urie Bronfenbrenner. Retrieved April 23, 2009, from National Louis University Web site: http://pt3. nl. edu/boemmelbriscoewebquest. pdf Cocking, R, Renninger, A (1993). The development and meaning of psychological distance. Lawrence Erlbaum Associates. Damon W Lerner R (2006). Handbook of Child Psychology: Theoretical models of human development. Wiley Sons Inc. p 991

International Standards on Auditing 315 Essays

International Standards on Auditing 315 Essays International Standards on Auditing 315 Essay International Standards on Auditing 315 Essay INTERNATIONAL STANDARD ON AUDITING 315 IDENTIFYING AND ASSESSING THE RISKS OF MATERIAL MISSTATEMENT THROUGH UNDERSTANDING THE ENTITY AND ITS ENVIRONMENT (Effective for audits of financial statements for periods beginning on or after December 15, 2009) CONTENTS Paragraph Introduction Scope of this ISA . 1 Effective Date 2 Objective . Definitions .. 4 Requirements Risk Assessment Procedures and Related Activities .. 5-10 The Required Understanding of the Entity and Its Environment, Including the Entity’s Internal Control .. 11-24 Identifying and Assessing the Risks of Material Misstatement 25-31 Documentation .. 2 Application and Other Explanatory Material Risk Assessment Procedures and Related Activities . A1-A16 The Required Understanding of the Entity and Its Environment, Including the Entity’s Internal Control .. A17-A104 Identifying and Assessing the Risks of Material Misstatement A105-A130 Documentation .. A131-A134 Appendix 1: Internal Control Components Appendix 2: Conditions and Events That May Indicate Risks of Material Misstatement IDENTIFYING AND ASSESSING THE RISKS OF MATERIAL MISSTATEMENT THROUGH UNDERSTANDING THE ENTITY AND ITS ENVIRONMENT ISA 315 272 International Standard on Auditing (ISA) 315, â€Å"Identifying and Assessing the Risks of Material Misstatement through Understanding the Entity and Its Environment† should be read in conjunction with ISA 200, â€Å"Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with International Standards on Auditing. † IDENTIFYING AND ASSESSING THE RISKS OF MATERIAL MISSTATEMENT THROUGH UNDERSTANDING THE ENTITY AND ITS ENVIRONMENT 273 ISA 315 AUDITING Introduction Scope of this ISA 1. This International Standard on Auditing (ISA) deals with the auditor’s responsibility to identify and assess the risks of material misstatement in the financial statements, through understanding the entity and its environment, including the entity’s internal control. Effective Date 2. This ISA is effective for audits of financial statements for periods beginning on or after December 15, 2009. Objective 3. The objective of the auditor is to identify and assess the risks of material misstatement, whether due to fraud or error, at the financial statement and assertion levels, through understanding the entity and its environment, including the entity’s internal control, thereby providing a basis for designing and implementing responses to the assessed risks of material misstatement. Definitions 4. For purposes of the ISAs, the following terms have the meanings attributed below: a) Assertions – Representations by management, explicit or otherwise, that are embodied in the financial statements, as used by the auditor to consider the different types of potential misstatements that may occur. (b) Business risk – A risk resulting from significant conditions, events, circumstances, actions or inactions that could adversely affect an entity’s ability to achieve its objectives and execute its strategies, or from the setting of inappropriate objectives and strategies. c) Internal control – The process designed, implemented and maintained by those charged with governance, management and other personnel to provide reasonable assurance about the achievement of an entity’s objectives with regard to reliability of financial reporting, effectiveness and efficiency of operations, and compliance with applicable laws and regulations. The term â€Å"controls† refers to any aspects of one or more of the components of internal control. d) Risk assessment procedures – The audit procedures performed to obtain an understanding of the entity and its environment, including the entity’s internal control, to identify and assess the risks of material misstatement, whether due to fraud or error, at the financial statement and assertion levels. IDENTIFYING AND ASSESSING THE RISKS OF MATERIAL MISSTATEMENT THROUGH UNDERSTANDING THE ENTITY AND ITS ENVIRONMENT ISA 315 274 (e) Significant risk – An identified and assess ed risk of material misstatement that, in the auditor’s judgment, requires special audit consideration. Requirements Risk Assessment Procedures and Related Activities . The auditor shall perform risk assessment procedures to provide a basis for the identification and assessment of risks of material misstatement at the financial statement and assertion levels. Risk assessment procedures by themselves, however, do not provide sufficient appropriate audit evidence on which to base the audit opinion. (Ref: Para. A1-A5) 6. The risk assessment procedures shall include the following: (a) Inquiries of management, and of others within the entity who in the auditor’s judgment may have information that is likely to assist in identifying risks of material misstatement due to fraud or error. Ref: Para. A6) (b) Analytical procedures. (Ref: Para. A7-A10) (c) Observation and inspection. (Ref: Para. A11) 7. The auditor shall consider whether information obtained from the auditorâ€℠¢s client acceptance or continuance process is relevant to identifying risks of material misstatement. 8. If the engagement partner has performed other engagements for the entity, the engagement partner shall consider whether information obtained is relevant to identifying risks of material misstatement. 9. Where the auditor intends to use information obtained from the auditor’s previous experience with the entity and from audit procedures performed in previous audits, the auditor shall determine whether changes have occurred since the previous audit that may affect its relevance to the current audit. (Ref: Para. A12-A13) 10. The engagement partner and other key engagement team members shall discuss the susceptibility of the entity’s financial statements to material misstatement, and the application of the applicable financial reporting framework to the entity’s facts and circumstances. The engagement partner shall determine which matters are to be communicated to engagement team members not involved in the discussion. (Ref: Para. A14-A16) IDENTIFYING AND ASSESSING THE RISKS OF MATERIAL MISSTATEMENT THROUGH UNDERSTANDING THE ENTITY AND ITS ENVIRONMENT 275 ISA 315 AUDITING The Required Understanding of the Entity and Its Environment, Including the Entity’s Internal Control The Entity and Its Environment 11. The auditor shall obtain an understanding of the following: (a) Relevant ndustry, regulatory, and other external factors including the applicable financial reporting framework. (Ref: Para. A17-A22) (b) The nature of the entity, including: (i) its operations; (ii) its ownership and governance structures; (iii) the types of investments that the entity is making and plans to make, including investments in special-purpose entities; and (iv) the way that the entity is structured and how it is financed to enable the auditor to understand the classes of transactio ns, account balances, and disclosures to be expected in the financial statements. Ref: Para. A23-A27) (c) The entity’s selection and application of accounting policies, including the reasons for changes thereto. The auditor shall evaluate whether the entity’s accounting policies are appropriate for its business and consistent with the applicable financial reporting framework and accounting policies used in the relevant industry. (Ref: Para. A28) (d) The entity’s objectives and strategies, and those related business risks that may result in risks of material misstatement. (Ref: Para. A29-A35) (e) The measurement and review of the entity’s financial performance. (Ref: Para. A36-A41) The Entity’s Internal Control 12. The auditor shall obtain an understanding of internal control relevant to the audit. Although most controls relevant to the audit are likely to relate to financial reporting, not all controls that relate to financial reporting are relevant to the audit. It is a matter of the auditor’s professional judgment whether a control, individually or in combination with others, is relevant to the audit. (Ref: Para. A42-A65) Nature and Extent of the Understanding of Relevant Controls 13. When obtaining an understanding of controls that are relevant to the audit, the auditor shall evaluate the design of those controls and determine whether they have been implemented, by performing procedures in addition to inquiry of the entity’s personnel. (Ref: Para. A66-A68) IDENTIFYING AND ASSESSING THE RISKS OF MATERIAL MISSTATEMENT THROUGH UNDERSTANDING THE ENTITY AND ITS ENVIRONMENT ISA 315 276 Components of Internal Control Control environment 14. The auditor shall obtain an understanding of the control environment. As part of obtaining this understanding, the auditor shall evaluate whether: (a) Management, with the oversight of those charged with governance, has created and maintained a culture of honesty and ethical behavior; and (b) The strengths in the control environment elements collectively provide an appropriate foundation for the other components of internal control, and whether those other components are not undermined by deficiencies in the control environment. (Ref: Para. A69-A78) The entity’s risk assessment process 15. The auditor shall obtain an understanding of whether the entity has a process for: (a) Identifying business risks relevant to financial reporting objectives; (b) Estimating the significance of the risks; (c) Assessing the likelihood of their occurrence; and (d) Deciding about actions to address those risks. (Ref: Para. A79) 16. If the entity has established such a process (referred to hereafter as the â€Å"entity’s risk assessment process†), the auditor shall obtain an understanding of it, and the results thereof. If the auditor identifies risks of material misstatement that management failed to identify, the auditor shall evaluate whether there was an underlying risk of a kind that the auditor expects would have been identified by the entity’s risk assessment process. If there is such a risk, the auditor shall obtain an understanding of why that process failed to identify it, and evaluate whether the process is appropriate to its circumstances or determine if there is a significant deficiency in internal control with regard to the entity’s risk assessment process. 17. If the entity has not established such a process or has an ad hoc process, the auditor shall discuss with management whether business risks relevant to financial reporting objectives have been identified and how they have been addressed. The auditor shall evaluate whether the absence of a documented risk assessment process is appropriate in the circumstances, or determine whether it represents a significant deficiency in internal control. (Ref: Para. A80) IDENTIFYING AND ASSESSING THE RISKS OF MATERIAL MISSTATEMENT THROUGH UNDERSTANDING THE ENTITY AND ITS ENVIRONMENT 277 ISA 315 AUDITING The information system, including the related business processes, relevant to financial reporting, and communication 18. The auditor shall obtain an understanding of the information system, including the related business processes, relevant to financial reporting, including the following areas: (a) The classes of transactions in the entity’s operations that are significant to the financial statements; (b) The procedures, within both information technology (IT) and manual systems, by which those transactions are initiated, recorded, processed, corrected as necessary, transferred to the general ledger and reported in the financial statements; c) The related accounting records, supporting information and specific accounts in the financial statements that are used to initiate, record, process and report transactions; this includes the correction of incorrect information and how information is transferred to the general ledger. The records may be in either manual or electronic form ; (d) How the information system captures events and conditions, other than transactions, that are significant to the financial statements; (e) The financial reporting process used to prepare the entity’s financial statements, including significant accounting estimates and disclosures; and f) Controls surrounding journal entries, including non-standard journal entries used to record non-recurring, unusual transactions or adjustments. (Ref: Para. A81-A85) 19. The auditor shall obtain an understanding of how the entity communicates financial reporting roles and responsibilities and significant matters relating to financial reporting, including: (Ref: Para. A86-A87) (a) Communications between management and those charged with governance; and (b) External communications, such as those with regulatory authorities. Control activities relevant to the audit 0. The auditor shall obtain an understanding of control activities relevant to the audit, being those the auditor judges it nece ssary to understand in order to assess the risks of material misstatement at the assertion level and design further audit procedures responsive to assessed risks. An audit does not require an understanding of all the control activities related to each significant class of transactions, account balance, and disclosure in the financial statements or to every assertion relevant to them. (Ref: Para. A88-A94) IDENTIFYING AND ASSESSING THE RISKS OF MATERIAL MISSTATEMENT THROUGH UNDERSTANDING THE ENTITY AND ITS ENVIRONMENT ISA 315 278 21. In understanding the entity’s control activities, the auditor shall obtain an understanding of how the entity has responded to risks arising from IT. (Ref: Para. A95-A97) Monitoring of controls 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 orga nizational 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) Identifying and Assessing the Risks of Material Misstatement 25. The auditor shall identify and assess the risks of material misstatement at: (a) the financial statement level; and (Ref: Para. A105-A108) (b) the assertion level for classes of transactions, account balances, and disclosures (Ref: Para. A109-A113) o provide a basis for designing and performing further audit procedures. 26. For this purpose, the auditor shall: (a) Identify risks throughout the process of obtaining an understanding of the entity and its environment, including relevant controls that relate to the risks, and by considering the classes of transactions, account balances, and disclosures in the financial statements; (Ref: Para. A114-A115) 1 The term â€Å"inter nal audit function† is defined in ISA 610, â€Å"Using the Work of Internal Auditors,† paragraph 7(a), as: â€Å"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. † IDENTIFYING AND ASSESSING THE RISKS OF MATERIAL MISSTATEMENT THROUGH UNDERSTANDING THE ENTITY AND ITS ENVIRONMENT 279 ISA 315 AUDITING (b) Assess the identified risks, and evaluate whether they relate more pervasively to the financial statements as a whole and potentially affect many assertions; (c) Relate the identified risks to what can go wrong at the assertion level, taking account of relevant controls that the auditor intends to test; and (Ref: Para. A116-A118) (d) Consider the likelihood of misstatement, including the possibility of multiple misstatements, and whether the potential misstatement is of a magnitude that could result in a material misstatement. Risks That Require Special Audit Consideration 27. As part of the risk assessment as described in paragraph 25, the auditor shall determine whether any of the risks identified are, in the auditor’s judgment, a significant risk. In exercising this judgment, the auditor shall exclude the effects of identified controls related to the risk. 28. In exercising judgment as to which risks are significant risks, the auditor shall consider at least the following: (a) Whether the risk is a risk of fraud; (b) Whether the risk is related to recent significant economic, accounting or other developments and, therefore, requires specific attention; (c) The complexity of transactions; (d) Whether the risk involves significant transactions with related parties; (e) The degree of subjectivity in the measurement of financial information related to the risk, especially those measurements involving a wide range of measurement uncertainty; and f) Whether the risk involves significant transactions that are outside the normal course of business for the entity, or that otherwise appear to be unusual. (Ref: Para. A119-A123) 29. If the auditor has determined that a significant risk exists, the auditor shall obtain an understanding of the entity’s controls, including control activities, relevant to that risk. (Ref: Para. A124-A126) Risks for Which Substantive Procedures Alone Do Not Provide Sufficient Appropriate Audit Evidence 30. In respect of some risks, the auditor may judge that it is not possible or practicable to obtain sufficient appropriate audit evidence only from substantive procedures. Such risks may relate to the inaccurate or incomplete recording of routine and significant classes of transactions or account balances, the characteristics of which often permit highly automated processing with IDENTIFYING AND ASSESSING THE RISKS OF MATERIAL MISSTATEMENT THROUGH UNDERSTANDING THE ENTITY AND ITS ENVIRONMENT ISA 315 280 little or no manual intervention. In such cases, the entity’s controls over such risks are relevant to the audit and the auditor shall obtain an understanding of them. (Ref: Para. A127-A129) Revision of Risk Assessment 31. The auditor’s assessment of the risks of material misstatement at the assertion level may change during the course of the audit as additional audit evidence is obtained. In circumstances where the auditor obtains audit evidence from performing further audit procedures, or if new information is obtained, either of which is inconsistent with the audit evidence on which the auditor originally based the assessment, the auditor shall revise the assessment and modify the further planned audit procedures accordingly. (Ref: Para. A130) Documentation 32. The auditor shall include in the audit documentation:2 (a) The discussion among the engagement team where required by paragraph 10, and the significant decisions reached; b) Key elements of the understanding obtained regarding each of the aspects of the entity and its environment specified in paragraph 11 and of each of the internal control components specified in paragraphs 14- 24; the sources of information from which the understanding was obtained; and the risk assessment procedures performed; (c) The identified and assessed risks of material misstatement at the financial statement level and at the asserti on level as required by paragraph 25; and (d) The risks identified, and related controls about which the auditor has obtained an understanding, as a result of the requirements in paragraphs 27-30. Ref: Para. A131-A134) *** Application and Other Explanatory Material Risk Assessment Procedures and Related Activities (Ref: Para. 5) A1. Obtaining an understanding of the entity and its environment, including the entity’s internal control (referred to hereafter as an â€Å"understanding of the entity†), is a continuous, dynamic process of gathering, updating and analyzing information throughout the audit. The understanding establishes a frame of 2 ISA 230, â€Å"Audit Documentation,† paragraphs 8-11, and paragraph A6. IDENTIFYING AND ASSESSING THE RISKS OF MATERIAL MISSTATEMENT THROUGH UNDERSTANDING THE ENTITY AND ITS ENVIRONMENT 281 ISA 315 AUDITING reference within which the auditor plans the audit and exercises professional judgment throughout the audit, for example, when: Assessing risks of material misstatement of the financial statements; Determining materiality in accordance with ISA 320;3 Considering the appropriateness of the selection and application of accounting policies, and the adequacy of financial statement disclosures; Identifying areas where special audit consideration may be necessary, for example, related party transactions, the appropriateness of management’s use of the going concern assumption, or considering the business purpose of transactions; Developing expectations for use when performing analytical procedures; Responding to the assessed risks of material misstatement, including designing and performing further audit procedures to obtain sufficient appropriate audit evidence; and Evaluating the sufficiency and appropriateness of audit evidence obtained, such as the appropriateness of assumptions and of management’s oral and written representations. A2. Information obtained by performing risk assessment procedures and related activities may be used by the auditor as audit evidence to support assessments of the risks of material misstatement. In addition, the auditor may obtain audit evidence about classes of transactions, account balances, or disclosures and related assertions and about the operating effectiveness of controls, even though such procedures were not specifically planned as substantive procedures or as tests of controls. The auditor also may choose to perform substantive procedures or tests of controls concurrently with risk assessment procedures because it is efficient to do so. A3. The auditor uses professional judgment to determine the extent of the understanding required. The auditor’s primary consideration is whether the understanding that has been obtained is sufficient to meet the objective stated in this ISA. The depth of the overall understanding that is required by the auditor is less than that possessed by management in managing the entity. A4. The risks to be assessed include both those due to error and those due to fraud, and both are covered by this ISA. However, the significance of fraud is such that further requirements and guidance are included in ISA 240 in relation to 3 ISA 320, â€Å"Materiality in Planning and Performing an Audit. IDENTIFYING AND ASSESSING THE RISKS OF MATERIAL MISSTATEMENT THROUGH UNDERSTANDING THE ENTITY AND ITS ENVIRONMENT ISA 315 282 risk assessment procedures and related activities to obtain information that is used to identify the risks of material misstatement due to fraud. 4 A5. Although the auditor is required to perform all the risk assessment procedures described in paragraph 6 in the course of obta ining the required understanding of the entity (see paragraphs 11-24), the auditor is not required to perform all of them for each aspect of that understanding. Other procedures may be performed where the information to be obtained therefrom may be helpful in identifying risks of material misstatement. Examples of such procedures include: Reviewing information obtained from external sources such as trade and economic journals; reports by analysts, banks, or rating agencies; or regulatory or financial publications. Making inquiries of the entity’s external legal counsel or of valuation experts that the entity has used. Inquiries of Management and Others within the Entity (Ref: Para. (a)) A6. Much of the information obtained by the auditor’s inquiries is obtained from management and those responsible for financial reporting. However, the auditor may also obtain information, or a different perspective in identifying risks of material misstatement, through inquiries of others within the entity and other employees with different levels of authority. For example: Inquiries directed towards those charged with governance may help th e auditor understand the environment in which the financial statements are prepared. Inquiries directed toward internal audit personnel may provide information about internal audit procedures performed during the year relating to the design and effectiveness of the entity’s internal control and whether management has satisfactorily responded to findings from those procedures. Inquiries of employees involved in initiating, processing or recording complex or unusual transactions may help the auditor to evaluate the appropriateness of the selection and application of certain accounting policies. Inquiries directed toward in-house legal counsel may provide information about such matters as litigation, compliance with laws and regulations, knowledge of fraud or suspected fraud affecting the entity, warranties, post-sales obligations, arrangements (such as joint ventures) with business partners and the meaning of contract terms. 4 ISA 240, â€Å"The Auditor’s Responsibilit ies Relating to Fraud in an Audit of Financial Statements,† paragraphs 12-24. IDENTIFYING AND ASSESSING THE RISKS OF MATERIAL MISSTATEMENT THROUGH UNDERSTANDING THE ENTITY AND ITS ENVIRONMENT 83 ISA 315 AUDITING Inquiries directed towards marketing or sales personnel may provide information about changes in the entity’s marketing strategies, sales trends, or contractual arrangements with its customers. Analytical Procedures (Ref: Para. 6(b)) A7. Analytical procedures performed as risk assessment procedures may identify aspects of the entity of which the auditor was unaware and may assist in assessing the risks of material misstatement in order to provide a basis for designing and implementing responses to the assessed risks. Analytical procedures performed as risk assessment procedures may include both financial and non-financial information, for example, the relationship between sales and square footage of selling space or volume of goods sold. A8. Analytical procedures may help identify the existence of unusual transactions or events, and amounts, ratios, and trends that might indicate matters that have audit implications. Unusual or unexpected relationships that are identified may assist the auditor in identifying risks of material misstatement, especially risks of material misstatement due to fraud. A9. However, when such analytical procedures use data aggregated at a high level (which may be the situation with analytical procedures performed as risk assessment procedures), the results of those analytical procedures only provide a broad initial indication about whether a material misstatement may exist. Accordingly, in such cases, consideration of other information that has been gathered when identifying the risks of material misstatement together with the results of such analytical procedures may assist the auditor in understanding and evaluating the results of the analytical procedures. Considerations Specific to Smaller Entities A10. Some smaller entities may not have interim or monthly financial information that can be used for purposes of analytical procedures. In these circumstances, although the auditor may be able to perform limited analytical procedures for purposes of planning the audit or obtain some information through inquiry, the auditor may need to plan to perform analytical procedures to identify and assess the risks of material misstatement when an early draft of the entity’s financial statements is available. Observation and Inspection (Ref: Para. 6(c)) A11. Observation and inspection may support inquiries of management and others, and may also provide information about the entity and its environment. Examples of such audit procedures include observation or inspection of the following: The entity’s operations. IDENTIFYING AND ASSESSING THE RISKS OF MATERIAL MISSTATEMENT THROUGH UNDERSTANDING THE ENTITY AND ITS ENVIRONMENT ISA 315 284 Documents (such as business plans and strategies), records, and internal control manuals. Reports prepared by management (such as quarterly management reports and interim financial statements) and those charged with governance (such as minutes of board of directors’ meetings). The entity’s premises and plant facilities. Information Obtained in Prior Periods (Ref: Para. 9) A12. The auditor’s previous experience with the entity and audit procedures performed in previous audits may provide the auditor with information about such matters as: Past misstatements and whether they were corrected on a timely basis. The nature of the entity and its environment, and the entity’s internal control (including deficiencies in internal control). Significant changes that the entity or its operations may have undergone since the prior financial period, which may assist the auditor in gaining a sufficient understanding of the entity to identify and assess risks of material misstatement. A13. The auditor is required to determine whether information obtained in prior periods remains relevant, if the auditor intends to use that information for the purposes of the current audit. This is because changes in the control environment, for example, may affect the relevance of information obtained in the prior year. To determine whether changes have occurred that may affect the relevance of such information, the auditor may make inquiries and perform other appropriate audit procedures, such as walk-throughs of relevant systems. Discussion among the Engagement Team (Ref: Para. 10) A14. The discussion among the engagement team about the susceptibility of the entity’s financial statements to material misstatement: Provides an opportunity for more experienced engagement team members, including the engagement partner, to share their insights based on their knowledge of the entity. Allows the engagement team members to exchange information about the business risks to which the entity is subject and about how and where the financial statements might be susceptible to material misstatement due to fraud or error. Assists the engagement team members to gain a better understanding of the potential for material misstatement of the financial statements in the specific areas assigned to them, and to understand how the results of the IDENTIFYING AND ASSESSING THE RISKS OF MATERIAL MISSTATEMENT THROUGH UNDERSTANDING THE ENTITY AND ITS ENVIRONMENT 85 ISA 315 AUDITING audit procedures that they perform may affect other aspects of the audit including the decisions about the nature, timing, and extent of further audit procedures. Provides a basis upon which engagement team members communicate and share new information obtained throughout the audit that may affect the assessment of risks of material misstatement or the audit procedures performed to address these risks. ISA 240 provides further requirements and guidance in relation to the discussion among the engagement team about the risks of fraud. 5 A15. It is not always necessary or practical for the discussion to include all members in a single discussion (as, for example, in a multi-location audit), nor is it necessary for all of the members of the engagement team to be informed of all of the decisions reached in the discussion. The engagement partner may discuss matters with key members of the engagement team including, if considered appropriate, specialists and those responsible for the audits of components, while delegating discussion with others, taking account of the extent of communication considered necessary throughout the engagement team. A communications plan, agreed by the engagement partner, may be useful. Considerations Specific to Smaller Entities A16. Many small audits are carried out entirely by the engagement partner (who may be a sole practitioner). In such situations, it is the engagement partner who, having personally conducted the planning of the audit, would be responsible for considering the susceptibility of the entity’s financial statements to material misstatement due to fraud or error. The Required Understanding of the Entity and Its Environment, Including the Entity’s Internal Control The Entity and Its Environment Industry, Regulatory and Other External Factors (Ref: Para. 11(a)) Industry Factors A17. Relevant industry factors include industry conditions such as the competitive environment, supplier and customer relationships, and technological developments. Examples of matters the auditor may consider include: The market and competition, including demand, capacity, and price competition. Cyclical or seasonal activity. 5 ISA 240, paragraph 15. IDENTIFYING AND ASSESSING THE RISKS OF MATERIAL MISSTATEMENT THROUGH UNDERSTANDING THE ENTITY AND ITS ENVIRONMENT ISA 315 286 Product technology relating to the entity’s products. Energy supply and cost. A18. The industry in which the entity operates may give rise to specific risks of material misstatement arising from the nature of the business or the degree of regulation. For example, long-term contracts may involve significant estimates of revenues and expenses that give rise to risks of material misstatement. In such cases, it is important that the engagement team include members with sufficient relevant knowledge and experience. 6 Regulatory Factors A19. Relevant regulatory factors include the regulatory environment. The regulatory environment encompasses, among other matters, the applicable financial reporting framework and the legal and political environment. Examples of matters the auditor may consider include: Accounting principles and industry specific practices. Regulatory framework for a regulated industry. Legislation and regulation that significantly affect the entity’s operations, including direct supervisory activities. Taxation (corporate and other). Government policies currently affecting the conduct of the entity’s business, such as monetary, including foreign exchange controls, fiscal, financial incentives (for example, government aid programs), and tariffs or trade restrictions policies. Environmental requirements affecting the industry and the entity’s business. A20. ISA 250 includes some specific requirements related to the legal and regulatory framework applicable t o the entity and the industry or sector in which the entity operates. 7 Considerations specific to public sector entities A21. For the audits of public sector entities, law, regulation or other authority may affect the entity’s operations. Such elements are essential to consider when obtaining an understanding of the entity and its environment. 6 ISA 220, â€Å"Quality Control for an Audit of Financial Statements,† paragraph 14. 7 ISA 250, â€Å"Consideration of Laws and Regulations in an Audit of Financial Statements,† paragraph 12. IDENTIFYING AND ASSESSING THE RISKS OF MATERIAL MISSTATEMENT THROUGH UNDERSTANDING THE ENTITY AND ITS ENVIRONMENT 287 ISA 315 AUDITING Other External Factors A22. Examples of other external factors affecting the entity that the auditor may consider include the general economic conditions, interest rates and availability of financing, and inflation or currency revaluation. Nature of the Entity (Ref: Para. 11(b)) A23. An understanding of the nature of an entity enables the auditor to understand such matters as: Whether the entity has a complex structure, for example with subsidiaries or other components in multiple locations. Complex structures often introduce issues that may give rise to risks of material misstatement. Such issues may include whether goodwill, joint ventures, investments, or specials of matters that the auditor may consider when obtaining an understanding of the nature of the entity include: Business operations such as: Nature of revenue sources, products or services, and markets, including involvement in electronic commerce such as Internet sales and marketing activities. 0 Conduct of operations (for example, stages and methods of production, or activities exposed to environmental risks). 0 Alliances, joint ventures, and outsourcing activities. 0 Geographic dispersion and industry segmentation. 0 Location of production facilities, warehouses, and offices, and location and quantities of inventories. 0 Key customers and important suppliers of goods and services, employment arrangements (including the existence of union ontracts, pension and other post employment benefits, stock option or incentive bonus arrangements, and government regulation related to employment matters). 8 ISA 5 50, â€Å"Related Parties. † IDENTIFYING AND ASSESSING THE RISKS OF MATERIAL MISSTATEMENT THROUGH UNDERSTANDING THE ENTITY AND ITS ENVIRONMENT ISA 315 288 0 Research and development activities and expenditures. 0 Transactions with related parties. Investments and investment activities such as: 0 Planned or recently executed acquisitions or divestitures. 0 Investments and dispositions of securities and loans. Capital investment activities. 0 Investments in non-consolidated entities, including partnerships, joint ventures and special-purpose entities. Financing and financing activities such as: 0 Major subsidiaries and associated entities, including consolidated and non-consolidated structures. 0 Debt structure and related terms, including off-balance-sheet financing arrangements and leasing arrangements. 0 Beneficial owners (local, foreign, business reputation and experience) and related parties. 0 Use of derivative financial instruments. Financial reporting such as: Accoun ting principles and industry specific practices, including industry-specific significant categories (for example, loans and investments for banks, or research and development for pharmaceuticals). 0 Revenue recognition practices. 0 Accounting for fair values. 0 Foreign currency assets, liabilities and transactions. 0 Accounting for unusual or complex transactions including those in controversial or emerging areas (for example, accounting for stock-based compensation). A25. Significant changes in the entity from prior periods may give rise to, or change, risks of material misstatement. Nature of Special-Purpose Entities A26. A special-purpose entity (sometimes referred to as a special-purpose vehicle) is an entity that is generally established for a narrow and well-defined purpose, such as to effect a lease or a securitization of financial assets, or to carry out research and development activities. It may take the form of a corporation, trust, partnership or unincorporated entity. The entity on behalf of which the specialIDENTIFYING AND ASSESSING THE RISKS OF MATERIAL MISSTATEMENT THROUGH UNDERSTANDING THE ENTITY AND ITS ENVIRONMENT 289 ISA 315 AUDITING urpose entity has been created may often transfer assets to the latter (for example, as part of a derecognition transaction involving financial assets), obtain the right to use the latter’s assets, or perform services for the latter, while other parties may provide the funding to the latter. As ISA 550 indicates, in some circumstances, a special-purpose entity may be a related party of the entity. 9 A27. Fin ancial reporting frameworks often specify detailed conditions that are deemed to amount to control, or circumstances under which the specialpurpose entity should be considered for consolidation. The interpretation of the requirements of such frameworks often demands a detailed knowledge of the relevant agreements involving the special-purpose entity. The Entity’s Selection and Application of Accounting Policies (Ref: Para. 11(c)) A28. An understanding of the entity’s selection and application of accounting policies may encompass such matters as: The methods the entity uses to account for significant and unusual transactions. The effect of significant accounting policies in controversial or emerging areas for which there is a lack of authoritative guidance or consensus. Changes in the entity’s accounting policies. Financial reporting standards and laws and regulations that are new to the entity and when and how the entity will adopt such requirements. Objectives and Strategies and Related Business Risks (Ref. Para. 11(d)) A29. The entity conducts its business in the context of industry, regulatory and other internal and external factors. To respond to these factors, the entity’s management or those charged with governance define objectives, which are the overall plans for the entity. Strategies are the approaches by which management intends to achieve its objectives. The entity’s objectives and strategies may change over time. A30. Business risk is broader than the risk of material misstatement of the financial statements, though it includes the latter. Business risk may arise from change or complexity. A failure to recognize the need for change may also give rise to business risk. Business risk may arise, for example, from: The development of new products or services that may fail; A market which, even if successfully developed, is inadequate to support a product or service; or 9 ISA 550, paragraph A7. IDENTIFYING AND ASSESSING THE RISKS OF MATERIAL MISSTATEMENT THROUGH UNDERSTANDING THE ENTITY AND ITS ENVIRONMENT ISA 315 290 Flaws in a product or service that may result in liabilities and reputational risk. A31. An understanding of the business risks facing the entity increases the likelihood of identifying risks of material misstatement, since most business risks will eventually have financial consequences and, therefore, an effect on the financial statements. However, the auditor does not have a responsibility to identify or assess all business risks because not all business risks give rise to risks of material misstatement. A32. Examples of matters that the auditor may consider when obtaining an understanding of the entity’s objectives, strategies and related business risks that may result in a risk of material misstatement of the financial statements include: Industry developments (a potential related business risk might be, for example, that the entity does not have the personnel or expertise to deal with the changes in the industry). New products and services (a potential related business risk might be, for example, that there is increased product liability). Expansion of the business (a potential related business risk might be, for example, that the demand has not been accurately estimated). New accounting requirements (a potential related business risk might be, for example, incomplete or improper implementation, or increased costs). Regulatory requirements (a potential related business risk might be, for example, that there is increased legal exposure). Current and prospective financin g requirements (a potential related business risk might be, for example, the loss of financing due to the entity’s inability to meet requirements). Use of IT (a potential related business risk might be, for example, that systems and processes are incompatible). The effects of implementing a strategy, particularly any effects that will lead to new accounting requirements (a potential related business risk might be, for example, incomplete or improper implementation). A33. A business risk may have an immediate consequence for the risk of material misstatement for classes of transactions, account balances, and disclosures at the assertion level or the financial statement level. For example, the business risk arising from a contracting customer base may increase the risk of material misstatement associated with the valuation of receivables. However, the same risk, particularly in combination with a contracting economy, may also have a longer-term consequence, which the auditor considers when assessing the IDENTIFYING AND ASSESSING THE RISKS OF MATERIAL MISSTATEMENT THROUGH UNDERSTANDING THE ENTITY AND ITS ENVIRONMENT 291 ISA 315 AUDITING appropriateness of the going concern assumption. Whether a business risk may result in a risk of material misstatement is, therefore, considered in light of the entity’s circumstances. Examples of conditions and events that may indicate risks of material misstatement are indicated in Appendix 2. A34. Usually, management identifies business risks and develops approaches to address them. Such a risk assessment process is part of internal control and is discussed in paragraph 15 and paragraphs A79-A80. Considerations Specific to Public Sector Entities A35. For the audits of public sector entities, â€Å"management objectives† may be influenced by concerns regarding public accountability and may include objectives which have their source in law, regulation or other authority. Measurement and Review of the Entity’s Financial Performance (Ref: Para. 11(e)) A36. Management and others will measure and review those things they regard as important. Performance measures, whether external or internal, create pressures on the entity. These pressures, in turn, may motivate management to take action to improve the business performance or to misstate the financial statements. Accordingly, an understanding of the entity’s performance measures assists the auditor in considering whether pressures to achieve performance targets may result in management actions that increase the risks of material misstatement, including those due to fraud. See ISA 240 for requirements and guidance in relation to the risks of fraud. A37. The measurement and review of financial performance is not the same as the monitoring of controls (discussed as a component of internal control in paragraphs A98s of internally-generated information used by management for measuring and reviewing financial performance, and which the auditor may consider, include: Key performance indicators (financial and non-financial) and key ratios, trends and operating statistics. Period-on-period financial performance analyses. IDENTIFYING AND ASSESSING THE RISKS OF MATERIAL MISSTATEMENT THROUGH UNDERSTANDING THE ENTITY AND ITS ENVIRONMENT ISA 315 292 Budgets, forecasts, variance analyses, segment i nformation and divisional, departmental or other level performance reports. Employee performance measures and incentive compensation policies. Comparisons of an entity’s performance with that of competitors. A39. External parties may also measure and review the entity’s financial performance. For example, external information such as analysts’ reports and credit rating agency reports may represent useful information for the auditor. Such reports can often be obtained from the entity being audited. A40. Internal measures may highlight unexpected results or trends requiring management to determine their cause and take corrective action (including, in some cases, the detection and correction of misstatements on a timely basis). Performance measures may also indicate to the auditor that risks of misstatement of related financial statement information do exist. For example, performance measures may indicate that the entity has unusually rapid growth or profitability when compared to that of other entities in the same industry. Such information, particularly if combined with other factors such as performance-based bonus or incentive remuneration, may indicate the potential risk of management bias in the preparation of the financial statements. Considerations Specific to Smaller Entities A41. Smaller entities often do not have processes to measure and review financial performance. Inquiry of management may reveal that it relies on certain key indicators for evaluating financial performance and taking appropriate action. If such inquiry indicates an absence of performance measurement or review, there may be an increased risk of misstatements not being detected and corrected. The Entity’s Internal Control (Ref: Para. 12) A42. An understanding of internal control assists the auditor in identifying types of potential misstatements and factors that affect the risks of material misstatement, and in designing the nature, timing, and extent of further audit procedures. A43. The following application material on internal control is presented in four sections, as follows: General Nature and Characteristics of Internal Control. Controls Relevant to the Audit. Nature and Extent of the Understanding of Relevant Controls. Components of Internal Control. IDENTIFYING AND ASSESSING THE RISKS OF MATERIAL MISSTATEMENT THROUGH UNDERSTANDING THE ENTITY AND ITS ENVIRONMENT 293 ISA 315 AUDITING General Nature and Characteristics of Internal Control Purpose of Internal Control A44. Internal control is designed, implemented and maintained to address identified business risks that threaten the achievement of any of the entity’s objectives that concern: The reliability of the entity’s financial reporting; The effectiveness and efficiency of its operations; and Its compliance with applicable laws and regulations. The way in which internal control is designed, implemented and maintained varies with an entity’s size and complexity. Considerations specific to smaller entities A45. Smaller entities may use less structured means and simpler processes and procedures to achieve their objectives. Limitations of Internal Control A46. Internal control, no matter how effective, can provide an entity with only reasonable assurance about achieving the entity’s financial reporting objectives. The likelihood of their achievement is affected by the inherent limitations of internal control. These include the realities that human judgment in decision-making can be faulty and that breakdowns in internal control can occur because of human error. For example, there may be an error in the design of, or in the change to, a control. Equally, the operation of a control may not be effective, such as where information produced for the purposes of internal control (for example, an exception report) is not effectively used because the individual responsible for reviewing the information does not understand its purpose or fails to take appropriate action. A47. Additionally, controls can be circumvented by the collusion of two or more people or inappropriate management override of internal control. For example, management may enter into side agreements with customers that alter he terms and conditions of the entity’s standard sales contracts, which may result in improper revenue recognition. Also, edit checks in a software program that are designed to identify and report transactions that exceed specified credit limits may be overridden or disabled. A48. Further, in designing and implementing controls, management may make judgments on the nature and extent of the controls it chooses to implement, and the nature and extent of the risks it chooses to assume. IDENTIFYING AND ASSESSING THE RISKS OF MATERIAL MISSTATEMENT THROUGH UNDERSTANDING THE ENTITY AND ITS ENVIRONMENT ISA 315 294 Considerations specific to smaller entities A49. Smaller entities often have fewer employees which may limit the extent to which segregation of duties is practicable. However, in a small owner-managed entity, the owner-manager may be able to exercise more effective oversight than in a larger entity. This oversight may compensate for the generally more limited opportunities for segregation of duties. A50. On the other hand, the owner-manager may be more able to override controls because the system of internal control is less structured. This is taken into account by the auditor when identifying the risks of material misstatement due to fraud. Division of Internal Control into Components A51. The division of internal control into the following five components, for purposes of the ISAs, provides a useful framework for auditors to consider how different aspects of an entity’s internal control may affect the audit: (a) The control environment; (b) The entity’s risk assessment process; (c) The information system, including the related business processes, relevant to financial reporting, and communication; (d) Control activities; and e) Monitoring of controls. The division does not necessarily reflect how an entity designs, implements and maintains internal control, or how it may classify any particular component. Auditors may use different terminology or frameworks to describe the various aspects of internal control, and their effect on the audit than those used in this ISA, provided all the components desc ribed in this ISA are addressed. A52. Application material relating to the five components of internal control as they relate to a financial statement audit is set out in paragraphs A69-A104 below. Appendix 1 provides further explanation of these components of internal control. Characteristics of Manual and Automated Elements of Internal Control Relevant to the Auditor’s Risk Assessment A53. An entity’s system of internal control contains manual elements and often contains automated elements. The characteristics of manual or automated elements are relevant to the auditor’s risk assessment and further audit procedures based thereon. IDENTIFYING AND ASSESSING THE RISKS OF MATERIAL MISSTATEMENT THROUGH UNDERSTANDING THE ENTITY AND ITS ENVIRONMENT 295 ISA 315 AUDITING A54. The use of manual or automated elements in internal control also affects the manner in which transactions are initiated, recorded, processed, and reported: Controls in a manual system may include such procedures as approvals and reviews of transactions, and reconciliations and follow-up of reconciling items. Alternatively, an entity may use automated procedures to initiate, record, process, and report transactions, in which case records in electronic format replace paper documents. Controls in IT systems consist of a combination of automated controls (for example, controls embedded in computer programs) and manual controls. Further, manual controls may be independent of IT, may use information produced by IT, or may be limited to monitoring the effective functioning of IT and of automated controls, and to handling exceptions. When IT is used to initiate, record, process or report transactions, or other financial data for inclusion in financial statements, the systems and programs may include controls related to the corresponding assertions for material accounts or may be critical to the effective functioning of manual controls that depend on IT. An entity’s mix of manual and automated elements in internal control varies with the nature and complexity of the entity’s use of IT. A55. Generally, IT benefits an entity’s internal control by enabling an entity to: Consistently apply predefined business rules and perform complex calculations in processing large volumes of transactions or data; Enhance the timeliness, availability, and accuracy of information; Facilitate the additional analysis of information; Enhance the ability to monitor the performance of the entity’s activities and its policies and procedures; Reduce the risk that controls will be circumvented; and Enhance the ability to achieve effective segregation of duties by implementing security controls in applications, databases, and operating systems. A56. IT also poses specific risks to an entity’s internal control, including, for example: Reliance on systems or programs that are inaccurately processing data, processing inaccur ate data, or both. Unauthorized access to data that may result in destruction of data or improper changes to data, including the recording of unauthorized or non-existent transactions, or inaccurate recording of transactions. IDENTIFYING AND ASSESSING THE RISKS OF MATERIAL MISSTATEMENT THROUGH UNDERSTANDING THE ENTITY AND ITS ENVIRONMENT ISA 315 296 Particular risks may arise where multiple users access a common database. The possibility of IT personnel gaining access privileges beyond those necessary to perform their assigned duties thereby breaking down segregation of duties. Unauthorized changes to data in master files. Unauthorized changes to systems or programs. Failure to make necessary changes to systems or programs. Inappropriate manual intervention. Potential loss of data or inability to access data as required. A57. Manual elements in internal control may be more suitable where judgment and discretion are required such as for the following circumstances: Large, unusual or non-recurring transactions. Circumstances where errors are difficult to define, anticipate or predict. In changing circumstances that require a control response outside the scope of an existing automated control. In monitoring the effectiveness of automated controls. A58. Manual elements in internal control may be less reliable than automated elements because they can be more easily bypassed, ignored, or overridden and they are also more prone to simple errors and mistakes. Consistency of application of a manual control element cannot therefore be assumed. Manual control elements may be less suitable for the following circumstances: High volume or recurring transactions, or in situations where errors that can be anticipated or predicted can be prevented, or detected and corrected, by control parameters that are automated. Control activities where the specific ways to perform the control can be adequately designed and automated. A59. The extent and nature of the risks to internal control vary depending on the nature and characteristics of the entity’s information system. The entity responds to the risks arising from the use of IT or from use of manual elements in internal control by establishing effective controls in light of the characteristics of the entity’s information system. Controls Relevant to the Audit A60. There is a direct relationship between an entity’s objectives and the controls it implements to provide reasonable assurance about their achievement. The IDENTIFYING AND ASSESSING THE RISKS OF MATERIAL MISSTATEMENT THROUGH UNDERSTANDING THE ENTITY AND ITS ENVIRONMENT 297 ISA 315 AUDITING ntity’s objectives, and therefore controls, relate to financial reporting, operations and compliance; however, not all of these objectives and controls are relevant to the auditor’s risk assessment. A61. Factors relevant to the auditor’s judgment about whether a control, individually or in combination with others, is relevant to the audit may include such matters as the following: Materiality. The significance of the r elated risk. The size of the entity. The nature of the entity’s business, including its organization and ownership characteristics. The diversity and complexity of the entity’s operations. Applicable legal and regulatory requirements. The circumstances and the applicable component of internal control. The nature and complexity of the systems that are part of the entity’s internal control, including the use of service organizations. Whether, and how, a specific control, individually or in combination with others, prevents, or detects and corrects, material misstatement. A62. Controls over the completeness and accuracy of information produced by the entity may be relevant to the audit if the auditor intends to make use of the information in designing and performing further procedures. Controls relating to operations and compliance objectives may also be relevant to an audit if they relate to data the auditor evaluates or uses in applying audit procedures. A63. Internal control over safeguarding of assets against unauthorized acquisition, use, or disposition may include controls relating to both financial reporting and operations objectives. The auditor’s consideration of such controls is generally limited to those relevant to the reliability of financial reporting. A64. An entity generally has controls relating to objectives that are not relevant to an audit and therefore need not be considered. For example, an entity may rely on a sophisticated system of automated controls to provide efficient and effective operations (such as an airline’s system of automated controls to maintain flight schedules), but these controls ordinarily would not be relevant to the audit. Further, although internal control applies to the entire entity or to any of its operating units or business processes, an understanding of internal control relating to each of the entity’s operating units and business processes may not be relevant to the audit. IDENTIFYING AND ASSESSING THE RISKS OF MATERIAL MISSTATEMENT THROUGH UNDERSTANDING THE ENTITY AND ITS ENVIRONMENT ISA 315 298 Considerations Specific to Public Sector Entities A65. Public sector auditors often have additional responsibilities with respect to internal control, for example to report on compliance with an established code of practice. Public sector auditors can also have responsibilities to report on compliance with law, regulation or other authority. As a result, their review of internal control may be broader and more detailed. Nature and Extent of the Understanding of Relevant Controls (Ref: Para. 3) A66. Evaluating the design of a control involves considering whether the control, individually or in combination with other controls, is capable of effectively preventing, or detecting and correcting, material misstatements. Implementation of a control means that the control exists and that the entity is using it. There is little point in assessing the implementation of a control that is not effective, and so the design of a control is considered first. An improperly designed control may represent a significant deficiency in internal control. A67. Risk assessment procedures to obtain audit evidence about the design and implementation of relevant controls may include: Inquiring of entity personnel. Observing the application of specific controls. Inspecting documents and reports. Tracing transactions through the information system relevant to financial reporting. Inquiry alone, however, is not sufficient for such purposes. A68. Obtaining an understanding of an entity’s controls is not sufficient to test their operating effectiveness, unless there is some automation that provides for the consistent operation of the controls. For example, obtaining audit evidence about the implementation of a manual control at a point in time does not provide audit evidence about the operating effectiveness of the control at other times during the period under audit. However, because of the inherent consistency of IT processing (see paragraph A55), performing audit procedures to determine whether an automated control has been implemented may serve as a test of that control’s operating effectiveness, depending on the auditor’s assessment and testing of controls such as those over program changes. Tests of the operating effectiveness of controls are further descr

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Everyday Hero Essay When I think of the word hero, I think of the countless Spiderman figures lying at the bottom of my brother’s toy chest, or even Prince Charming rescuing Sleeping Beauty from her seemingly endless slumber. However, what usually does not come to mind, are the true real life heroes that I believe posses higher superpowers than the Incredibles ever could. Though they do not have the ability to fly or read minds, one way or another, these people have helped someone in a tough situation. A true hero can be anyone from the firefighters at the station to your older sister living in the room next door. They may have helped to save your life, or merely helped you get through your math homework last night. Whatever the case, one quality that all true heroes must possess is the ability to be an example of goodwill in the world. A hero will help someone because they want to, not because they have to. Though they are not perfect, no one is, a hero will continue to put others first when they know that it is most important to do so. Three years ago, my mother was diagnosed with breast cancer. The news came as an utter shock to everyone, considering the fact that she was one of the healthiest and most active members of my family. She played tennis and practiced yoga at least four times a week; always ate healthy and organic foods, and on top of all this, there was barely any history of breast cancer on our family tree! Though her case was not as bad as others, it still required her to undergo weeks of arduous chemotherapy and radiation. Through her darker days, she herself would be the one to calm me down and reassure me that everything would be okay. The night before my mother’s surgery, I started to cry, scared and frustrated with what was happening around me. Though she was also frightened and anxious, my mother was the one to comfort me and explain that a plastic surgeon did not actually turn people into plastic, as I had imagined. Even during her most bleak and miserable moments, she put everything aside and reached out to help me deal with her pain. For this, she is my hero. No, she is not Superwoman, or a firefighter,  or even your everyday do-gooder; but she’s my mom, and that is good enough for me. This just goes to show that a seemingly ordinary woman can be a hero to someone in her own way. Heroes are everyday characters, and if you look hard enough you will find the hero in your own life. This I believe.

Analysing Nora’s Comment to Mrs. Linde :: A Dolls House Marriage Henrik Ibsen Essays

Analysing Nora’s Comment to Mrs. Linde Nora’s comment to Mrs. Linde that Torvald doesn’t like to see sewing in his home indicates that Torvald likes the idea and the appearance of a beautiful, carefree wife who does not have to work but rather serves as a showpiece. As Nora explains to Mrs. Linde, Torvald likes his home to seem â€Å"happy and welcoming.† Mrs. Linde’s response that Nora too is skilled at making a home look happy because she is â€Å"her father’s daughter† suggests that Nora’s father regarded her in a way similar to Torvald—as a means to giving a home its proper appearance. Torvald’s opinion on his wife’s role in their home is his defining character characteristics. His unrelenting treatment of Nora as a doll indicates that he is unable to develop or grow. As Nora’s understanding of the people and events around her develops, Torvald’s remains stationary. He is the only character who continues to believe in the charade, probably because he is the only main character in the play that does not keep secrets or harbour any hidden complexity. Each of the other characters—Nora, Mrs. Linde, Krogstad, Dr. Rank—has at some point kept secrets, hidden a true love, or plotted for one reason or another. Nora’s use of Torvald’s pet names for her to win his cooperation is an act of manipulation on her part. She knows that calling herself his â€Å"little bird,† his â€Å"squirrel,† and his â€Å"skylark,† and thus conforming to his desired standards will make him more willingly to give in to her wishes. At first, Nora’s interaction with Dr. Rank is correspondingly manipulative. When she flirts with him by showing her stockings, it seems that she hopes to lure Dr. Rank and then persuade him to speak to Torvald about keeping Krogstad on at the bank. Yet after Dr. Rank confesses that he loves her, Nora suddenly shuts down and refuses to ask her favour. She has developed some moral honesty. Despite her desperate need, she realizes that she would be taking advantage of Dr. Rank by capitalizing on his love for her. When Nora explains that Dr. Rank’s poor health owes to his father’s promiscuity, for the second time we come across the idea that moral corruption transfers from parent to child. (In Act One, Torvald argues that young criminals result from a household full of lies.) These statements clarify Nora’s torment and her refusal to interact with her children when she feels like a criminal. They also reveal that both

Beloved

As you begin the book you are given these ideas of darkness as you become consumed in the memories and stories of the characters. The characters of the book could definitely feel this tone even one who had never been in the house such as Paul D when he says, â€Å"Good God†¦ What kind Of evil you got in here? † p. 8 as he took his first steps Into 124. This tone takes up a good part of the beginning of the book as it sets up the trailing tone of a good majority of the beginning of the book.As you read further into the book you find out more about all of the characters pasts and all of the torture, rape, and cruelty they were made to endure. These memories slightly shift the tone to become gloom. Other then the times when Beloved needed her, Seethe confided herself to a corner chair. † p. 292 was the effect of these memories on Seethe. As though through these memories that Seethe couldn't let go her life seemed to be sucked like a leech from a host. Beloved was a hum an embodiment of the memories thatSeethe latched unto and couldn't relinquish though she tried her hardest to forget. This gives off a tone of gloom and despair as you read further into the horrible cruel lives of the characters. â€Å"Seethe me and you we got more yesterday than anybody. We need some kind of tomorrow? P. 320 says Paul D as the book closes whose words portray the tone of the end of the book. As you read to the end of the book and Beloved is exorcised away the tone changes from the dark and gloom of the unforgotten memories to being hopeful as Seethe begins to relieve and concise with her past.This allows her to look forward to the future and to see what she already has. This tone ends the book with a feeling of hopefulness towards the characters and their futures. Throughout Beloved the tone changes a couple of different times. In different parts the tones seems to be dark, gloomy and even hopeful but as the book ends these tones are set aside to create a tone of r econciliation. That you should never dwell on the past but that you should look forward to the future. Beloved As you begin the book you are given these ideas of darkness as you become consumed in the memories and stories of the characters. The characters of the book could definitely feel this tone even one who had never been in the house such as Paul D when he says, â€Å"Good God†¦ What kind Of evil you got in here? † p. 8 as he took his first steps Into 124. This tone takes up a good part of the beginning of the book as it sets up the trailing tone of a good majority of the beginning of the book.As you read further into the book you find out more about all of the characters pasts and all of the torture, rape, and cruelty they were made to endure. These memories slightly shift the tone to become gloom. Other then the times when Beloved needed her, Seethe confided herself to a corner chair. † p. 292 was the effect of these memories on Seethe. As though through these memories that Seethe couldn't let go her life seemed to be sucked like a leech from a host. Beloved was a hum an embodiment of the memories thatSeethe latched unto and couldn't relinquish though she tried her hardest to forget. This gives off a tone of gloom and despair as you read further into the horrible cruel lives of the characters. â€Å"Seethe me and you we got more yesterday than anybody. We need some kind of tomorrow? P. 320 says Paul D as the book closes whose words portray the tone of the end of the book. As you read to the end of the book and Beloved is exorcised away the tone changes from the dark and gloom of the unforgotten memories to being hopeful as Seethe begins to relieve and concise with her past.This allows her to look forward to the future and to see what she already has. This tone ends the book with a feeling of hopefulness towards the characters and their futures. Throughout Beloved the tone changes a couple of different times. In different parts the tones seems to be dark, gloomy and even hopeful but as the book ends these tones are set aside to create a tone of r econciliation. That you should never dwell on the past but that you should look forward to the future.

Meeting the needs of all learners Essay

I always attempt my best to maintain an environment where all learners are engaged in the process of learning. As a precaution, I always obtain details of the learners as much as possible before I start to teach them. This helps to obtain a very good idea about the nature of learners and their needs. Key elements of inclusive learning are identified as â€Å"including all learners in learning together, multi-level, authentic instruction for learners of diverse abilities, building community and meet the needs of children with behavioural challenges, providing support for teachers, maintaining a good relationship with parents/carers and be careful and thoughtful in decision-making and leadership and empowerment†. As a teacher I always try to provide a maximum opportunity for all my learners by considering their individual needs. For example, visually impaired students get a seat closer to the whiteboard and I am willing to wear an electronic device to help students who have any impairment in hearing. Direct and indirect discrimination are always challenged immediately and learners of all levels of abilities and all ethnic backgrounds are treated equally according to the best of my ability. Some learners might need extra support in assessment processes and it should be provided. For example some learners are eligible to use a reader or a scribe in examinations. These needs must be addressed as a teacher as learners may not always demand for these rights. However, I have some limitations as a teacher in maintaining an inclusive classroom environment. For instance, I do not know the sign language and I need to improve my knowledge on certain special and learning needs although I have some knowledge on the most common needs and how to support them in a learning environment. However, I am always willing to obtain support from other professionals in situations where I feel that help can be of help for a learner to progress. Therefore, I conclude my inclusive teaching practice as an effective approach and I am constantly trying to improve it to help the learners better. Analyse ways to improve own practice in using learning and teaching approaches to meet the needs of all learners. As I am always looking for opportunities for improve myself as a professional, I have set some goals for myself to be achieved in the time to come. Some of them are related to my personal development and others are to improve my professional development and teaching abilities. Moreover, some targets are for improving my qualifications. As inclusive practice involves many different types of learners I need to make myself prepared for a range of learners to accommodate the needs of all students. I could learn the sign language and make myself familiar with the needs and behaviour of learners with special and learning needs although I have some knowledge and experience at the moment. I believe this is a very important task as 5.4% of all undergraduate students in the United Kingdom have self-assessed them as having some sort of an impairment in a survey conducted in 2005 (Adams and Brown, 2006:2). Personally, I did not have much exposure to work with learners with special needs or learn ing needs during the first 6 years of my teaching career in Sri Lanka as the process of recognizing learners with needs is not specific enough in Sri Lanka when compared to the United Kingdom. When I think back about my school time (1989-2001), I can clearly think of some fellow students who were with us without any special support but I now realise that they probably had some special learning needs. Unfortunately, there were a set of students who were unable to read or write properly even when they were close to the GCE(Ordinary Level) examination and they were not given any support and they failed almost in all subjects and dropped out from the school. Because of my lack of experience in the childhood, I was unable to identify students with learning needs in the first few years of my teaching career. I gained that ability after exposing myself to teaching in the United Kingdom during the past 4 years and I am still working on improving that knowledge. Teaching resources and different approaches of teaching have always been an interest for me and it is a hobby of mine to collect teaching resources and I have a considerably good collection of books and soft copies. However, I am still working on collecting more resources and improving them to make them more inclusive and helpful for all learners. My professional connections and the relationship with the fellow practitioners are quite good. Moreover, I read books and other materials to understand the mind-set of different learners and I expect this to be an advantage for me to understand and liaise better with  the learners who obtain my service. I believe that these improvements can be of enormous help for me to be a better teaching professional and I believe this as an on-going process.

Colonialism in Manifesto to Certain Filipinos by Jose Rizal

Colonialism in Manifesto to Certain Filipinos by Jose Rizal Introduction In his essay, Manifesto to Certain Filipinos, Philippine national hero Jose Rizal condemns the actions of the Katipunan (the Philippine rebellion group) in their attempt to stage a bloody rebellion against Spanish authorities due to the perceived injustices of Spain against the Filipino people (Rizal, 1896). Rizal elaborates on how he wanted no part of the rebellion, on how such actions would have largely negative consequences and that a better path to take would be that of education and hard work so as to earn liberation rather than fight for it.Advertising We will write a custom essay sample on Colonialism in â€Å"Manifesto to Certain Filipinos† by Jose Rizal specifically for you for only $16.05 $11/page Learn More It must be noted that towards the latter part of his essay Rizal mentions the need for reform and education, research into the 333 years of Spanish colonial rule in the Philippines shows that while the colonial rule has in l arge part benefited the Philippines through the establishment of modern institutions in country, the use and benefits of such institutions are largely isolated towards the Spanish colonial powers, religious orders and illustrados (educated Filipinos who are part of middle class in the Philippines) (Delmendo, 1998). The trickle down effect seen in most modern societies is largely absent with the population mostly at the mercy of Spanish authorities and the church who exert great amounts of influence in ensuring the subjugation of the Filipino people both intellectually and culturally. This can be seen in the early refusal of the church to teach Spanish to the Filipino people, restricting higher forms of education and ensuring the continued domiciled behavior of the local populace through the effective use of religious subjugation. The Works of Rizal In some of the works of Rizal, most notably his titular novel Noli Me Tangere (The Social Cancer) Rizal elaborates through the main char acter, Jose Crisostomo Ibarra y Magsalin, that in order to for the country to effectively progress education is needed in order to show to the Spanish that the Filipinos are equals and not subordinates (Gonzalez 1993). An examination of other works and documents by Rizal shows that it was his desire that the Filipino people be eventually considered equals by the people of Spain (Lifshey, 2008). The inherent problem, he states, of the situation in the Philippines is that through the oppression of the church in repressing education to the majority of Filipinos most of the population is not able to show the hidden potential they possess (Bonoan, 1998). This particular notion is shown in the latter part of his essay where he mentions what is needed is reform to come from the top in order for Philippine society to improve as a whole. Based on the examination of various historians examining the actions and writings of Rizal it generally agree upon that it was not his desire for rebellion to occur but rather integration wherein through the establishment of positive reforms and equal treatment to the Filipino people the Philippines would eventually be considered a province of Spain with its people accorded the same rights and privileges as any Spanish citizen (Bonoan, 1998).Advertising Looking for essay on asian? Let's see if we can help you! Get your first paper with 15% OFF Learn More Hence the fact he so vehemently condemned the rebellion being instigated by the Katipunan forces due to the fact such methods would not benefit the Philippines in the least. The Concept of Self-Governance The opinion of Rizal is largely justifiable due to the fact that the well educated class of citizens (the illustrados) within the Philippines was still quite few and as a result the effective governing of the country which only they could possibly do was in large part unfeasible. This is reflected in the fact that Rizal considered the rebellion wholly absurd, w orse than absurd, in fact it was disastrous (Rizal, 1896). For him the Filipino people werent ready due to the continued repercussions of the 333 years of Spanish colonial rule which in large part, while modernizing the country, left most of its people divided, uneducated and incapable of properly running a country (Delmendo, 1998). Based off the speculation of various historians examining that particular period in history most if not all agree with the assumptions of Rizal that the Philippines was still not ready at that particular point in time for self-governance (Delmendo, 1998). Another factor to consider is what would have happened should the rebellion not have taken place and the reforms had been enacted. It has been speculated that if the reforms Rizal had spoken of had actually taken place the Philippines would probably not have become independent but rather would have become a province of Spain with its people being considered Spanish citizens. While it can never be truly known if such an event would have truly occurred it can be said with certainty though that if it had, it would have benefited the Philippines immensely in terms of cultural, social and economic development. Influences in Spain and the Philippines In the initial parts of the essay Rizal mentions the use of his name as the instigator of rebellion (Rizal, 1896). It must be noted that this is due to the fact many of the works of Rizal such as his titular novel the Noli Me Tangere (The Social Cancer) and its sequel El Filibusterismo (The Reign of Greed) as well as a large portion of his essays all inherently criticize the current Spanish regime in the Philippines as well as mention the need for change. This intellectual rebellion accomplished by Rizal not only had effects in Spain but also in the Philippines. While most of his work as considered inappropriate and subsequently banned by the local Spanish government as well as the Church enough made it through to the Philippines which lit the flames of nationalism so to speak creating the initial plans for open rebellion against the Spanish forces in the country (Lifshey, 2008).Advertising We will write a custom essay sample on Colonialism in â€Å"Manifesto to Certain Filipinos† by Jose Rizal specifically for you for only $16.05 $11/page Learn More On the other hand in Spain the works of Rizal also had the effect of the public starting to question the methods employed by the Spanish government in the case of Philippines. If the rebellion had not started the growing public awareness of the situation in the Philippines might have actually started the reform process stated by Rizal as a necessity for the continued progress of the Philippines. Conclusion Overall, the essay can be considered a rant by Jose Rizal in that the pacifistic intellectual rebellion that he had worked so hard to attain over the course of his lifetime was in the end undone by the violent rebellion caused by a few w ho used his name to spark the initial flames of conflict. It must be noted that while Rizal did not support the creation of the rebellion itself he did in fact become a part of it using his talents as a doctor. The essay itself seems to convey the message that people had twisted his words about change and created an entirely new message for their own ends. In the end Jose Rizal met his death by firing squad, immortalized as the icon of a rebellion that he himself did not want to bring about in the first place. Reference List Bonoan, RJ, Jose Rizal, liberator of the Philippines, America, 175, 18, 1996, pp. 18-21. Delmendo, S 1998, The American Factor in Jose Rizals Nationalism, Amerasia Journal, 24, 2, 1998 p. 34. Gonzalez, NM 1993, The novel of justice, Chicago Review, 39, 3/4, 1993, p. 39. Lifshey, A, The Literary Alterities of Philippine Nationalism in Josà © Rizals El filibusterismo, PMLA: Publications of the Modern Language Association of  America, 123, 5, 2008, pp. 1434-1447 .Advertising Looking for essay on asian? Let's see if we can help you! Get your first paper with 15% OFF Learn More Rizal, J 1896, Manifesto to Certain Filipinos in joserizal.info. Web.