Compliance with Laws and Regulations

Question 1

Who is responsible for ensuring that the entity’s operations are conducted in accordance with applicable laws and regulations?

Answer 1

Management and those charged with governance

Question 2

Who is responsible for obtaining reasonable assurancce that the financial statements are free of material misstatement due to noncompliance with laws and regulations?

Answer 2

Auditor

Question 3

What is the auditor not responsible for when dealing with compliance with laws and regulations?

Answer 3

Preventing noncompliance and being expected to detect noncompliance with all laws and regulations

Question 4

When obtaining an understanding of the entity and its environment, the auditor should obtain an understanding of?

Answer 4

Legal and regulatory framework and how the entity is complying with that framework

Question 5

What should an auditor do when he/she suspects that noncompliance may exist?

Answer 5

Auditor should discuss the matter with management at least one level above those suspected of noncompliance and when appropriate, those charged with governance.

Question 6

A duty to disclose outside the entity for reporting to regulatory and enforcement authorities may exist?

Answer 6

Response to inquiries from an auditor to a predecessor auditor, court order, and assistance from a government agency