Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

EY - Assurance And Reporting > Module 9 - Auditor Responsibilities: Legislation > Flashcards

Module 9 - Auditor Responsibilities: Legislation Flashcards

1
Q

Auditors rights to receive info are:

A

Right of access at all times to company’s records

Right for employees and directors to provide necessary info and explanations

Right for subsidiaries to provide them with any information they need

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Auditors rights in relation to resolutions and meetings:

A

Receive copies of all communications relating to any written resolution

Receive all notices of any general meetings and also to attend such meetings

Right to be heard at any general meeting which concerns them as auditor

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Is it an offence to knowingly or recklessly give misleading, false or deceptive statements to an auditor?

A

Yes

According to CA 2006

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Mnemonic for auditors requirements to form opinions beyond the key reporting responsibilities

A

RAPID

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What does RAPID stand for?

A

Returns have been received from branches not visited by the auditor

Accounts agree with the underlying records

Proper accounting records have been kept

Info and explanations necessary for the purpose of the audit have been received

Directors emoluments (salary, bonuses etc) and other benefits disclosures are complete

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Do LSE listed companies have to comply with more onerous disclosure requirements

A

Yes

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Does the CA 2006 require an auditor to be appointed for each financial year that an audit is required?

A

Yes

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

How is the auditor usually appointed

A

By the shareholders via the passing of an ordinary resolution

(Over 50% of shareholders agree via a vote)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Are there any situations in which the directors are allowed to appoint the auditor?

A

Yes

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What are the situations in which directors are allowed to appoint the auditor?

A

The first time a company requires an auditor

To fill a casual vacancy (eg an auditor resigns during the term of office)

If the company previously had audit exemption but have lost the exemption and now need an auditor

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Where the auditor has been appointed by directors, what do they shareholders have to decide?

A

Whether that auditor should be reappointed next year

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

How does choosing an auditor work in a public company?

A

An auditor will be appointed / re-appointed at each annual general meeting (‘AGM’) by the shareholders

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

How does choosing an auditor work in a private company?

A

The auditor is deemed to be automatically reappointed unless 5% or more of shareholders object (or auditors first appointed by directors)

Some companies may have something which prohibits automatic re-appointment

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Can the auditor be removed at any time by shareholders?

A

Yes

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Does an auditor have rights to protect against unwarranted dismissal?

A

Yes

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

What are the auditor rights to protect against unwarranted dismissal?

A

Copy of motion to remove auditors must be sent to auditors

Auditor has right to make written statements regarding their removal and have these passed to shareholders

Auditor retains the right to attend the normal AGM of the company in the year they were removed

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Does an auditor have to be notified if they are to be removed / not reappointed?

A

Yes

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

In order for an auditor to resign, what must they do?

A

Letter of resignation

If the company is public - a statement of circumstances to the registered office of the company

19
Q

Do auditors on non-public interest companies have to provide a statement of circumstances?

A

Yes (there are exemptions though)

20
Q

What exemptions may mean that an auditor of a non-public company does have to provide a statement of circumstances?

A

Company being exempt from audit

Being wound-up due to insolvency

Auditor ceasing to hold office at the end of their term

21
Q

Where a statement of circumstances is deposited with a company, the auditor may request what?

A

That a General meeting is called to consider the circumstances connected with the registration

22
Q

A statement of circumstances must either:

A

Assert there are no circumstances connected with the departure from office that shareholders should be made aware of

Disclose details of such circumstances

23
Q

Is it an offence for an auditor to not deposit a statement of circumstances in a situation where they are required to?

A

Yes

24
Q

In most cases, the statement of circumstances must be sent to who?

A

The company’s shareholders and debenture holders

The appropriate audit authority (the FRC) / the auditors RSB

Companies house - unless company obtains a court order to prevent this

25
Q

Is it an offence for the auditor to cease to hold office without sending a statement of compliance to the relevant places?

A

Yes

26
Q

What is money laundering?

A

Involves possessing, concealing or dealing with the proceeds of any crime

27
Q

Examples of money laundering?

A

Tax evasion and other financial crimes

Drug dealing

Terrorism

28
Q

Where is the guidance for accountants on money laundering?

A

The CCAB Anti-Money Laundering (AML) Guidance

29
Q

The AML Guidance incorporates and interprets the main legislation applicable to accountants such as:

A

the Proceeds of Crime Act (‘POCA’)

ML Regulations

the Serious and Organised Crime and Police act 2005 (‘SCOPA’)

30
Q

Any accountant, or their clients may conduct money laundering by:

A

Knowingly and / or actively becoming involved in money laundering

Inadvertently becoming involved - being used by an employee, client/customer, or third party, so that they do not know that a transaction involves money laundering

31
Q

POCA sets out three principal offences in relation to money laundering:

A

Concealing or transferring the proceeds of criminal conduct

Arrangement to facilitate the acquisition, retention, use or control of criminal property

Acquiring, using or possessing criminal property

32
Q

Penalties for offences laid out in POCA:

A

Up to 14 years in prison

A fine

Or both

33
Q

ML Regulations identify a specific group of businesses that are termed regulated sectors:

A 
Credit institutions
Auditors
Financial institutions
Independent or legal professionals 
Trust or company service providers
Estate agents and letting agents
High value dealers
Casinos 
Art market participants
Crypto asset exchange providers 
Custodian wallet providers
34
Q

Potential additional offence for those in regulated sectors under the POCA include:

A

Failure to report

Tipping off

35
Q

When does an MLRO commit an offence?

A

If they fail to report to the NCA in a timely fashion

36
Q

ML Regulations cover some key areas:

A

Risk assessment and controls

Customer due diligence

Registration and Supervision of relevant businesses

37
Q

Within ML Regulations, Risk assessment and controls is covered. Policies and procedures in this include:

A

Risk assessment

Policies, controls and procedures

Internal controls

Training

38
Q

Within ML Regulations, customer due diligence is covered. How does a firm deal with this?

A

Seek satisfactory evidence from a reliable and independent source. Eg passports of directors / companies house search (for the company itself) / beneficial owners

Accounts should obtain more evidence when there is a higher degree of risk

39
Q

How long should records of any client identification procedures and risk assessment (ML Regulations) be kept for?

A

Five years

40
Q

How soon after should records relating to client identity be deleted after completion of a relationship / transaction?

A

Five years

41
Q

With supervision and registration (ML Regulations), is it a criminal offence to provide accountancy services within the regulated sector without being supervised by an appropriate AML supervisory body:

A

Yes

42
Q

Circumstances where the auditor must be cautious not to tip off the client:

A

Instances of non-compliance

Communication with those charged with governance

Resigning unexpectedly from the audit engagement

Issuing a modified audit report

Delaying the audit report

43
Q

Is there any obligation for those working outside the regulated sectors to make a money laundering report?

A

No

Unless it relates to terrorism

EY - Assurance And Reporting (19 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions