When auditing a nonissuer's compliance with laws and regulations, the auditor's responsibility differs based on the nature of the law. For laws that have a 'direct effect' on the determination of material amounts and disclosures in the financial statements (e.g., tax laws), the auditor must:

Under AU-C 250, for laws with a direct effect on financial statement amounts (like tax laws affecting tax liability), the auditor must obtain sufficient appropriate audit evidence regarding compliance. For other laws (indirect effect), the responsibility is limited to specified audit procedures (inquiry/inspection) to identify noncompliance.