Audit Imperative 7: Obtain deep understanding of the entity and its environment and improve application of the risk

assessment procedures Become experts in risk assessments and audit responses We are required to obtain an understanding of the entity and its environment, including the entitys internal control. This is a continuous dynamic process of gathering, updating, and analyzing information throughout the audit. This understanding provides a frame of reference for the entire engagement to assist in our exercise of professional judgment for certain areas such as: Assessing the risks of material misstatements [consider industry related risks, information available in the public domain] Determining materiality Responding to the assessed risks of material misstatement, including designing an performing further audit procedures Evaluating the sufficiency and appropriateness of audit evidence obtained In addition, we are required to perform risk assessment procedures to provide a basis for the identification and assessment of the risks of material misstatement. It is important the risk assessment procedures include the following: Inquiries of management and others within the entity that may have information to assist us in identifying risks of material misstatement due to fraud or error Preliminary analytical procedures Observation and inspection Leading practices Obtaining and documenting our thorough understanding of the entity and its environment, including the development of flowcharts Challenging prior year documentation related to our understanding and the risk assessment procedures performed to determine if there is any improvement that can be made Seeking consultation as per the Firms policies Please document below how the team has implemented audit imperative #7 during the current year:

WP Reference: ________________________________

Audit Imperative 8: We all own quality individually and together Culture of professional excellence Executing the highest quality audits starts with each of us, individually. Every member of the engagement team plays an important role in making a difference. Engagement teams should discuss the FY13 Audit Imperatives and make sure they are properly implemented and evidenced in our audit working papers. Refer to the one-page responsibility guides to be clear of the expectations. Each member of the engagement team should continually implement improvements in their areas of responsibility. Questions regarding the FY13 Audit Imperatives should be raised with the engagement partner, Professional Practice Director, or Audit Business Leader in your member firm. When in doubt, consult. We need to make sure we are bringing our best thinking to complex accounting and auditing judgments. Through effective implementation of the FY13 Audit Imperatives, together we can drive professional excellence. Leading practices Seeking to make improvement in areas of responsibility Consistent implementation of the imperatives with frequent engagement team discussion about the importance of the required actions Consulting with more senior engagement team members in areas where there are questions and concerns Please document below how the team has implemented audit imperative #8 during the current year:

WP Reference: ________________________________
Prepared by/ Date: Engagement Manager/ Date: Engagement Partner/ Date: EQC Reviewer*/ Date: (* in case of GTN / MGTN engagements, the form should be signed by both the EQCR Partner and EQCR Manager) (Physical sign off to be affixed by the Preparer, Engagement Manager, Engagement Partner and EQC Reviewer(s)) Reviewed by/ Date: