Chapter 2.1 Regulation

Question 1

What does it mean by audit is a statutory concept?

Answer 1

Audit is required by statute (law)
Majority of companies are required by national law to have an audit

Question 2

Key exception

Answer 2

Small companies (SME)
Based on turnover (revenue) & total assets at year-end

Question 3

Auditing profession is subjected to regulation from a range of sources

Answer 3

1. National legislation
2. National regulation and standard setting
3. International standard setting
4. Professional bodies

Question 4

Benefits of statutory audit

Answer 4

Independent view of FS provided by the EA
Review of accounting & control systems
Possibility that EA might detect fraud