Chapter 5 - Legislation Flashcards

1
Q

What is noted under CA 2006, s 386?

A

Every company is required to keep adequate accounting records. They must be sufficient:

  • To show and explain the company’s transactions;
  • To disclose with reasonable accuracy, at any time, the financial position of the company at that time;
  • To enable the directors to ensure that any accounts required to be prepared comply with the requirements of the Act.
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2
Q

What is noted under CA 2006, s 389?

A

If a company fails to comply with s 386, then every officer of the company will be liable.

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3
Q

What is noted under CA 2006, s 388?

A

Accounting records must be kept at the registered office or such places as the directors otherwise think fit.

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4
Q

What is noted under CA 2006, s 381?

A

Small companies are exempt from audit.

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5
Q

What are noted under CA 2006, s 382 & 383?

A

A company is considered small if it complied with at least two of:

  • Turnover of not more than £5.6m
  • Balance sheet total not more than £2.8m
  • Number of employees less than 50
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6
Q

What is noted under CA 2006, s 384?

A

Certain companies are exempted from the small companies exemption under s 381. These are companies such as insurance and public companies.

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7
Q

What is noted under CA 2006, s 294?

A

Directors of every company must prepare accounts of the company for each financial year.

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8
Q

What is noted under CA 2006, s 396?

A

The financial statements as noted under s 294, must comprise of:

a) Balance Sheet; and
b) Profit and Loss Account

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9
Q

What is noted under CA 2006, s 414?

A

Annual accounts must be approved by the board and signed by a director on the balance sheet.

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10
Q

What is noted under CA 2006, s 393?

A

Directors must not approve accounts unless they are satisfied that they give a true and fair view of the assets, liabilities, financial position and profit or loss:

a) In the case of an individual company, of the company;
b) In the case of a company’s group accounts of the undertakings included in the consolidation as a whole, so far as concerns members of the company.

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11
Q

What is noted under CA 2006, s 423?

A

Every company must send a copy of its accounts to:

a) Every member;
b) Every holder of any debenture;
c) Every person entitled to receive notice of general meetings.

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12
Q

What is noted under CA 2006, s 485(1)?

A

Every company must appoint an auditor or auditors unless for each financial year the directors reasonably resolve otherwise on the ground that audited accounts are unlikely to be required.

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13
Q

What are noted under CA 2006, s 1219, 1212 and 1214?

A

s 1219 states that auditors must be appropriately qualified.

s 1212 states that they must be members of recognised supervisory bodies.

s 1214 requires that auditors meet the independence requirements.

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14
Q

What is noted under CA 2006, s 434?

A

accounts must be accompanied by an auditor’s report unless it is an exempt company and the directors have taken advantage of this exemption.

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15
Q

What are noted under CA 2006, s 441 and 444?

A

s 441 states that directors must deliver the audited accounts and reports to the Registrar.

s 444 states that this includes small companies.

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16
Q

What is noted under CA 2006, s 498?

A

An auditor must carry out such investigations as will enable him to form an opinion as to:

a) Whether adequate accounting records have been kept by the company and returns adequate for their audit have been received from branches not visited by him; and
b) Whether the company’s individual accounts are in agreement with the accounting records and returns; and
c) In the case of a quoted company whether the auditable part of the directors’ remuneration report is in agreement with the accounting records and returns.

17
Q

What is noted under CA 2006, s 510?

A

A company may by ordinary resolution at any time remove an auditor from office. As auditors who is not re-appointed after expiry of his term of office may require the company to allow him to make representation to the members.

18
Q

What are noted under CA 2006, s 516 and 517?

A

s 516 states that an auditor may resign from office any time by depositing a notice in writing to that effect at the company’s registered office.

s 517 states that the company must then send a copy of that notice to the Registrar.

19
Q

What is noted under CA 2006, s 499?

A

Auditors have right of access at all times to the company’s books and accounts and are entitled to require a wide range of persons, in particular the company’s officers and employees, to provide them with such information and explanations as they think necessary for the performance of their duties.

20
Q

What is noted under CA 2006, s 501?

A

Criminal sanctions apply where information or explanation is misleading, false or deceptive in a material particular.

21
Q

What is noted under CA 2006, s 532(2)?

A

Any provision, whether contained in a company’s articles or in any contract with the company or otherwise, for exempting an auditor of a company (to any extent) from any liability that would otherwise attach to him in connection with any negligence, default, breach of duty or breach of trust in relation to the company occurring in the course of the audit of accounts, is void.

22
Q

What is the relationship between the exemption of an auditor’s liability to CA 2006, s 535, 536 and 537?

A

Exemption of an auditor’s liability is possible if there is a specially approved Liability Limitation Agreement in accordance with s 535 and approved by members under s 536. However under s 537, it is stated that exemption can only limit liability to what is “Fair and Reasonable”