4.3 - Legal and Professional Requirements

Question 1

Where can all the legal requirements that auditors are subject to be found?

Answer 1

Companies Act 2006

Question 2

What does the Companies Act require of auditors?

Answer 2

That auditors are members of a Recognised Supervisory Body (RSB) and are eligible for appointment under that body

Question 3

RSBs are required to have rules to ensure that those eligible for appointment as a company auditor are either:

Answer 3

• individuals holding an appropriate qualification
• firms controlled by qualified persons

Question 4

The Companies Act 2006 also sets out factors which make a person ineligible for being a company auditor, for example if they are:

Answer 4

• an officer or employee of the company
• a partner or employee of such a person
• any partner in a partnership in which such a person is a partner

Question 5

What are the Financial Reporting Council (FRC) in charge of?

Answer 5

Independently monitoring the accountancy profession (regulators of accountancy professon)

Question 6

What do the FRC operate under?

Answer 6

The FRC operate under executive authority delegated by the government

Question 7

What five standards and guidelines for auditing does the FRC issue?

Answer 7

• auditing standards
• ethical standards for auditors
• practice notes
• bulletins
• standards for review of financial information and examination of prospective financial information

Question 8

What are the guidelines provided by the FRC based off?

Answer 8

International Standards on Auditing (ISA)