Page 107 - CA Final Audit Titanium Full Book. (With Cover Pages)

CA Ravi Taori
Step 1
1. Inquiry: Inquiry of management and others within the entity, including in-house legal counsel.
2A. Review-Minutes: Reviewing minutes of meetings of those charged with governance.
2B. Correspondence: Correspondence between the entity and its external legal counsel.
3. Expenses: Reviewing legal expense accounts.
Step 2
RMM: If risk of material misstatement (RMM) exists regarding litigation or claims, the auditor shall seek
direct communication with the entity's external legal counsel.
Letter of Inquiry: The auditor shall do so through a letter of inquiry, prepared by management and sent by the
auditor, requesting direct communication with the entity's external legal counsel.
Prohibition: If law or regulation prohibits direct communication with the legal counsel, the auditor shall
perform alternative audit procedures.
Meeting: In cases of complexity, disagreement or significant risk, (CDS) between External Legal Counsel &
management, the auditor may meet the entity's external legal counsel, usually with management's permission
and attendance.
Step 3
Written Representations: The auditor shall request written representations from management and, if
applicable, those charged with governance, confirming that all known actual or possible litigation and claims
have been disclosed and appropriately accounted for in accordance with the applicable financial reporting
framework.

(CNO-SA501.140) Part - 3 Segment Information
Audit Procedures
Understanding Methods: Obtain knowledge of management's methods for determining segment
information.
Evaluating Methods: Evaluate if methods are as per Applicable financial reporting framework.
Test Methods: If necessary, test the application of these methods.
Audit Procedures: Conduct analytical or other relevant audit procedures.
Further Explanation: Understanding of the Methods Used by Management
Understanding Segment Information Methods (Shortcut Segment – ABC)
Inter Segment Transactions: Sales, transfers, charges between segments, and elimination of intersegment
amounts.
Allocation: The allocation of assets and costs among segments.
Budget Comparisons: Comparisons with budgets and expected results, such as operating profits as a
percentage of sales.
Consistency: Consistency with prior periods and adequacy of disclosures regarding inconsistencies.

www.auditguru.in 5.6