PQR & Co., Chartered Accountants, are the statutory auditors of LMN Ltd. During the audit for the financial year ended 31st March, 2026, the…

Using Audit Evidence Obtained in Previous Audits: In determining whether it is appropriate to use audit evidence about the operating effectiveness of controls obtained in previous audits, and, if so, the length of the time period that may elapse before retesting a control, the auditor shall consider the following: (a) The effectiveness of other elements of internal control, including the control environment, the entity's monitoring of controls, and the entity's risk assessment process (b) The risks arising from the characteristics of the control, including whether it is manual or automated (c) The effectiveness of general IT-controls (d) The effectiveness of the control and its application by the entity, including the nature and extent of deviations in the application of the control noted in previous audits, and whether there have been personnel changes that significantly affect the application of the control (e) Whether the lack of a change in a particular control poses a risk due to changing circumstances and (f) The risks of material misstatement and the extent of reliance on the control If the auditor plans to use audit evidence from a previous audit about the operating effectiveness of specific controls, the auditor shall establish the continuing relevance of that evidence by obtaining audit evidence about whether significant changes in those controls have occurred subsequent to the previous audit. Considering the given facts, the auditor should carefully evaluate the above factors, especially personnel changes and IT system upgrades, and establish whether the previous audit evidence remains relevant before deciding to rely on it or perform fresh testing.