When obtaining reasonable assurance that the financial statements are free from material misstatements,auditors should consider the applicable legal and regulatory frameworks that apply to the entity.

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Auditors are required to consider the applicable legal and regulatory frameworks that govern the entity being audited. This is because such frameworks may affect the financial statements and impact the accuracy, completeness, and reliability of the financial information presented. Thus, auditors should assess whether the financial statements are in compliance with the relevant legal and regulatory requirements, and whether any noncompliance may lead to material misstatements in the financial statements.

When Obtaining Reasonable Assurance That the Financial Statements Are Free