Lesson 1 - APA

Question 1

What are the four stages of the audit process?

Answer 1

Stage 1 - Preliminary audit engagement activities
Stage 2 - Planning the audit
Stage 3 - Obtaining audit evidence (auditor’s further response to risk)
Stage 4 - Evaluation, conclusion and reporting

Question 2

What are the fundamental ethical principles of the profession?

Answer 2

1. Integrity
2. Objectivity
3. Professional competence
4. Due care
5. Confidentiality

Question 3

List the different type of main threats to the ethical principles

Answer 3

• Self interest threat
• Self review threat
• Advocacy
• Familiarity
• Intimidation

Question 4

Who may register with the Regulatory Board?

Answer 4

Auditing Profession Act No.26 of 2005 section 37 (2)
(a) The applicant has complied with the prescribed education, training and competence requirements for a registered auditor or registered candidate auditor;

(b) Removed.

(c) Is resident within the Republic;

(d) Is fit and proper to practice the profession.

Question 5

Who may NOT register with the Regulatory Board?

Answer 5

Auditing Profession Act No.26 of 2005 section 37 paragraph 3:

The Regulatory Board may not register an individual as a registered auditor or registered candidate auditor if that individual-

(a) has at any time been removed from an office of trust because of misconduct related to a discharge of that office.

(b) has been convicted whether in the Republic or elsewhere of theft, fraud, forgery, uttering a forged document or any offence involving dishonesty.

(c) is for the time being declared by a competent court to be of a unsound mind or unable to manage his or her own affairs.

Question 6

Which firms may register as registered auditors?

Answer 6

Auditing Profession Act No.26 of 2005 section 38 paragraph 1 - The only firms that may become registered auditors are:

(a) partnerships of which all the partners are individuals who are themselves registered auditors;

(b) sole proprietors where the proprietor is a registered auditor; and

(c) companies which comply with subsection (3)

Question 7

What must be on the a auditing firms letterhead?

Answer 7

Auditing Profession Act No.26 of 2005 section 41 paragraph (6)

A registered auditor may not- (a) practice under a firm name or title unless on every letterhead bearing the name of the title there appears-

(i) The registered auditor’s present first names, or initials, and surname, or;

(ii) In the case of a partnership, at least the present first names, or initials, and surnames of the managing partners.

(iii) in the case of a company, the present first names or initials and surnames of the directors.

Question 8

What are the steps regarding the duty to report on irregularities (section 45 of the Auditing Professions Act No.26 of 2005).

Answer 8

45. Duty to report on irregularities:
46. An individual registered auditor who has reason to believe a reportable irregularity has taken place must without delay send a written report to the Regulatory Board.
47. The report must include details of the RI.
48. The registered auditor must notify within three days of sending the report to the Regulatory board notify the members of the management board of the entity in writing of the sending of the report.
49. The auditor must as soon as possible but no later then 30 days from the date the report was sent to the Regulatory Board:
    - discuss the report with management
    - Allow management to an opportunity to make representations in respect of the report.
50. Send another report to the Regulatory Board which provides a statement from the auditor whether they still feel there is a reportable irregularity.