Understanding the entity

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The Understanding the entity folder on the Documents page contains documents that dive into the details of your client's entity to help you identify risks.

Complete the documents in the Understanding the entity folder in the following sequence.

Note: The client responses provided in 030 determine which documents are available in the Understanding the entity folder. If one or more documents in the sequence is not available, continue to the next available document.

  1. 500 Understanding the Entity
    Use this checklist to document your general understanding of the entity, then use the information to identify risks.
  2. 507 Minutes of governance meetings
    Use this checklist to document the organization's governance meeting minutes (such as, Board of Directors, Audit Committee, etc.). Based on the information in the meeting minutes, identify risks and controls, then document them in the 507 Minutes of governance meetings too.
  3. 645.1 Litigation, claims and non-compliance
    The procedures in this checklist scan the client's legal expenses for potential risks, such as significant lawsuits.
    If you answer Yes to the procedure Do you require a letter to the entity's external counsel?, the 645.2 Letter to law firm (PEG AL7.8) letter draft becomes available in the Documents page. The 645.3 Client queries - Solicitor's confirmation query document also becomes available. Once you review the letter, you can use 645.3 to send the letter to client contacts.
  4. 647.1 Selecting an auditor's expert
    If you've responded Yes to Selecting an auditor's expert (PEG 428) in the 500 Understanding the entity (PEG 500, 501, 510, 515, 525) document, three documents become available:
    - 647.1 Selecting an auditor's expert
    - 647.2 Hiring an external audit specialist (PEG AL1.8)
    - 647.3 Client queries - Hiring an external audit specialist
    The responses you provide in the 647.1 checklist customize the draft letter 647.2. Once you review the letter, you can use the 647.3 query document to send the letter to client contacts.
  5. 660 Group audit planning
    If you have enabled the "Consolidated" feature, this document will become visible to aid in your consolidated group audit planning.