Assurance responsibilities

Question 1

What are the general responsibilities of Directors in an assurance?
(3)
MPS

Answer 1

Maintain accounting records
Prepare FS
Safeguard assets

Question 2

What are the general responsibilities of Auditors in an assurance?
(4)

Answer 2

Follow CA06.
Set out terms (in an engagement letter).
Follow ethical standards.
Perform quality control procedures.

Question 3

What are the responsibilities regarding ‘Audit & Internal Control’ of Directors in an assurance?

Answer 3

Prepare FS
Design internal controls which prevent, detect and correct errors / omissions

Question 4

What are the responsibilities regarding ‘Audit & Internal Control’ of Auditors in an assurance?
(4)

Answer 4

Express opinion on the FS
Detect material errors
Test internal controls if they address audit risks (relate to FS)
Communicate weaknesses in internal controls to those charged with governance

Question 5

What are the responsibilities regarding ‘Fraud’ of Directors in an assurance?

Answer 5

> Prevent, detect and correct any instances of fraud

Question 6

What are the responsibilities regarding ‘Fraud’ of the Auditors in an assurance?
(3)

ISA 240

Answer 6

Detect material frauds in the FS.
Obtain written representation from Directors acknowledging their responsibilities.
Communicate any instances of fraud with
1) management
2) those charged with governance (directors / audit committee)
3) Regulatory authorities

Question 7

What are the responsibilities regarding ‘Laws & Regulations’ of Directors in an assurance?
(2)

ISA 250A

Answer 7

Identify all relevant laws and regulations
Be compliant

Question 8

What are the responsibilities regarding ‘Laws & Regulations’ of the auditors in an assurance?
(4)

ISA 250A

Answer 8

1. Consider any instances of non-compliance:
   Do they cause errors / omissions in the FS, e.g. Provisions, Impairments, Fines, GC Issues

2.Directly impacting FS - obtain sufficient and appropriate evidence.

3.H&S - enquiry of management and review correspondence files.

4.Communicate with 1) those charged with governance 2) shareholders 3) third parties

Question 9

What are the responsibilities regarding ‘Related Parties’ of Directors in an assurance?

ISA 550

Answer 9

Identify all related parties
Disclose transactions

Question 10

What are the responsibilities regarding ‘Related Parties’ of the Auditors in an assurance?

ISA 550

Answer 10

Audit the disclosures provided relating to Related Parties.

Question 11

What are the responsibilities regarding ‘Going Concern’ of Directors in an assurance?

ISA 570

Answer 11

> Make an assessment as to whether the company is a GC or not
Prepare forecasts to provide evidence to support GC assumption

Question 12

What are the responsibilities regarding ‘Going Concern’ of the Auditors in an assurance?

ISA 570

Answer 12

> Audit the GC assumption

Question 13

What are the responsibilities regarding ‘Money Laundering’ of Directors in an assurance?

Answer 13

Prevent ML in your organization through use of internal controls
Don’t do it

Question 14

What are the responsibilities regarding ‘Money Laundering’ of the Auditors in an assurance?
(6)

Answer 14

Appoint MLRO.
MLRO to report suspicions to NCA.
Provide staff with training on how to spot.
Perform client ID procedures.
Keep records.
Don’t tip off if you do have suspicions.

Question 15

What are the responsibilities regarding ‘Bribery’ of Directors in an assurance?

Answer 15

> Prevent bribery in organization through internal controls

Question 16

What are the responsibilities regarding ‘Bribery’ of the Auditors in an assurance?

Answer 16

Consider risks of non-compliance e.g. fines, penalties
Report suspicions to NCA
Same as ML

Question 17

What is the Fraud Procedures for an Auditor? (6)

Answer 17

1. Perform a fraud risk assessment.
2. Exercise professional skepticism.
3. Discuss fraud amount engagement team.
4. Respond appropriately to assessed level of fraud risk.
5. Consider implications on other areas of audit.
6. Specialist skills ?

Question 18

What is the Non-compliance Procedures for an Auditor? (3)

Answer 18

1. Perform risk assessment
2. Obtain evidence about compliance
3. If non-compliance suspected, document, discuss with management.

Question 19

What is the RPT procedures of an Auditor? (7)

ODRRRCW

Answer 19

1. Obtain list of all RP from M.
2. Detailed tests of transactions / balances.
3. Review minutes of meetings of SH and Directors.
4. Review bank confirmation letters for evidence of guarantor relationships.
5. Review investment transactions e.g. new subs = RP
6. Confirm correct disclosures in FS.
7. WR from management, RPT disclosed.