AU-C Section 200.24-26: Complying with Relevant Requirements

AU-C Section 200.24-26 says:

".24 Subject to paragraph .26, the auditor should comply with each requirement of an AU-C section unless, in the circumstances of the audit,

1. the entire AU-C section is not relevant; or
2. the requirement is not relevant because it is conditional and the condition does not exist.

.25 GAAS use the following two categories of professional requirements,identified by specific terms, to describe the degree of responsibility it imposes on auditors:

• Unconditional requirements.The auditor must comply with an unconditional requirement in all cases in which such requirement is relevant. GAAS use the word "must" to indicate an unconditional requirement.  
• Presumptively mandatory requirements. The auditor must comply with a presumptively mandatory requirement in all cases in which such a requirement is relevant except in rare circumstances discussed in paragraph .26. GAAS use the word "should" to indicate a presumptively mandatory requirement. 

.26 In rare circumstances, the auditor may judge it necessary to depart from a relevant presumptively mandatory requirement. In such circumstances,the auditor should perform alternative audit procedures to achieve the intent of that requirement. The need for the auditor to depart from a relevant presumptively mandatory requirement is expected to arise only when the requirement is for a specific procedure to be performed and, in the specific circumstances of the audit, that procedure would be ineffective in achieving the intent of the requirement." 

As such, the Auditor must follow all requirements in GAAS unless 

•  an entire AU-C Section is not relevant (e.g., if the entity under audit does not have an internal audit function, the Auditor does not have to comply with any of the requirements in AU-C Section 610 "Using the Work of Internal Auditors") or
• a requirement within an AU-C Section is not relevant (e.g., if there is no limited scope on the audit, then the auditor is not required to modify the auditor's opinion due to a scope limitation; or if there are no internal control deficiencies, the auditor is not required to internal control deficiencies to management or those charged with governance).

There are two types of requirements:

• unconditional requirements: these are characterized with a "must" statement; the Auditor has to comply with these requirements unless irrelevant.
• presumptively mandatory: these are characterized with a "should" statement; whether or not the auditor complies with these requirements depends on his professional judgment.  Section 230 establishes documentation requirements for when an auditor departs from a relevant requirement.  If a requirement would likely not achieve its intent, the Auditor can depart from that requirement, but he should perform alternative procedures that achieve that intent.

 https://www.aicpa.org/content/dam/aicpa/research/standards/auditattest/downloadabledocuments/au-c-00200.pdf