[The following paragraph was effective for audits of financial statements for periods beginning on or after June 15, 2003. It was amended, effective for audits of fiscal years beginning on or after December 15, 2010. See PCAOB Release No. 2010-004.

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Section 319 discusses the inherent limitations of internal control. As fair value determinations often involve subjective judgments by management, this may affect the nature of controls that are capable of being implemented, including the possibility of management override of controls (see section 316, Consideration of Fraud in a Financial Statement Audit. The auditor considers the inherent limitations of internal control in such circumstances in assessing control risk.