Lecture 4 - Audit Regulation

Question 1

What approaches regulate the audit profession?

Answer 1

• The profession
• The state
• Other independent bodies

Question 2

What did the Companies Act 1844 require?

Answer 2

A Balance Sheet audit

Question 3

What did the Companies Act 1900 require?

Answer 3

An independent (but not necessarily qualified) auditor to audit the Balance Sheet ON TRUTH AND FAIRNESS

Question 4

What years was a Balance Sheet audit not required?

Answer 4

1856 to 1900

Question 5

When does the period for directors to appoint an auditor end?

Answer 5

28 days after the previous years annual accounts are sent out

Question 6

How do shareholders appoint an auditor?

Answer 6

• Passing an ordinary resolution during a period of appointing auditors
• OR if the company and directors fails to do so

Question 7

If directors and shareholders fail to appoint an auditor, what will occur?

Answer 7

Re-appointment will occur, if no valid objections prevent this

Question 8

What can prevent re-appointment?

Answer 8

• If the auditor was selected by directors
• Articles of association requires it
• Company receives notice from shareholders with voting rights, worth 5% (or whatever AOA says) rejecting it
• Members pass a resolution
• Directors pass a resolution

Question 9

What does RQB stand for?

Answer 9

Regulatory Qualifying Body

Question 10

What does RSB stand for?

Answer 10

Regulatory Supervisory Body

Question 11

What do Regulatory Supervisory Bodies do?

Answer 11

• Assess the eligibility of persons to be company auditors

- Conduct the audit work

Question 12

What do Regulatory Qualifying Bodies do?

Answer 12

• Admit a person to a course that leads to qualification

- Deprives or awards qualification

Question 13

What does IAASB standard stand for?

Answer 13

International Auditing and Assurance Standards Board

Question 14

What standards does the IAASB issue?

Answer 14

International Standards of Auditing (ISAs)