ISA 315 par A104 states that the auditor should obtain an understanding of the entity and its environment, including its internal control, through inquiries and other procedures to assess the risk of material misstatement at the financial statement and assertion levels. This involves evaluating the design and implementation of internal controls and determining whether they have been effectively implemented. The auditor also needs to understand the industry, regulatory, and other external factors that may impact the entity's financial reporting. Additionally, the auditor should consider whether there are any significant unusual transactions or events that may require special audit consideration.
