Brainscape's Knowledge GenomeTM

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


See full index

ruh oh > P7. External audit > Flashcards

P7. External audit Flashcards

1
Q

Which companies can qualify as exempt from audit? (3)

A

Micro/small companies
Subsidiary companies
Dormant companies

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

What is the primary function and objective of the auditor?

A

Obtain reasonable assurance that the FS are free from material misstatement (whether fraud or error), issuing a report to the company’s members including the auditors opinion in this regard

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

Other than accounts, what do auditors report on for quoted companies? (2)

A

Auditable parts of remuneration report
Corporate governance statement (consistency with accounts)

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

Does an audit contain any assessment of the future viability of a company or any judgement on efficiency or effectiveness of management?

A

No

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

Which documents is an auditor entitled to access?

A

Books, accounts and records (and of subsidiaries)

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

Auditors and general meetings…

A

Entitled to receive all notices and comms, and attend and speak at

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

The auditor cannot be…

A

An officer, partner or employee of the company, or any associated undertaking - a partner or employee of such a person - or a partnership of which such a person is a partner

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

Argument against allowing audit firms to provide non-audit services

A

Auditor independence will inevitably be compromised by self-interest, self-review, being in an advocacy position, over-familiarity or intimidation

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

Regarding which companies are audit firms prohibited from providing certain non-audit services

A

PIEs (public interest entities)

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

What is the restriction on fees payable by a PIE to their audit firm for non-audit services?

A

70% of average audit fees of previous 3 consecutive financial years

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

5 services which auditors cannot provide to PIEs

A

Tax services
Payroll services
Valuation services
Bookkeeping and preparing FS
Playing a role in decision-making

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

What is the period for appointing auditors in first audited financial year?

A

Before the end of the period allowed for sending accounts to members, or before the date the accounts were sent to members (if this was earlier)

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

What is the period for appointing auditors after first audited financial year?

A

Within 28 days commencing on the deadline for sending accounts to members, or within 28 days of the date the accounts were sent to members (if earlier)

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

(PRIVATE CO) Who typically makes initial auditor appointment?

A

Directors

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

(PRIVATE CO) Who, and how often, confirm the appointment of auditors?

A

Members, annually

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

What if auditors have not been appointed?

A

Company gives notice to Secretary of State (within 7 days of expiry of period allowed), and SoS will appoint to fill vacancy

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

(PRIVATE CO) If not auditor has been appointed by end of next period allowed , who is deemed to have bene reappointed?

A

Previous auditors

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

(PRIVATE CO) When is it not possible for previous auditors to be deemed to have been reappointed? (5)

A

Appointment was by directors
Articles require actual reappointment
Deemed reappointment is prevented by members
Resolution to reappoint auditors is lost
Directors have resolved that no auditor should be appointed

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

(PRIVATE CO) When can members prevent deemed reappointment?

A

If members with more than 5% voting rights give notice to the company to that effect

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

(PUBLIC CO) Before which meeting, and by who, are the auditors appointed in first financial year?

A

Meeting at which accounts are laid, usually by directors

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

(PUBLIC CO) When must auditors be appointed for subsequent years?

A

At the conclusion of the meeting at which the accounts for previous year are laid before members

22
Q

Does the appointment of an auditor of a public co automatically renew? (deemed reappointment)

A

No

23
Q

Criteria for being a PIE (1 of 3)

A

Issuer with any transferable securities admitted to trading on regulated market
Credit institution
Insurance undertaking

24
Q

Restrictions on continuous audit of a PIE

A

Max 20 year term
Tender for provision must be done at least once every 10 years

25
Q

How many audit firms (with a reasonable chance of being appointed) must tender for PIE be extended to?

A

At least 2

26
Q

What is the cooling off period after auditing PIE for 20 years? (before then being able to audit same co)

A

4 years

27
Q

How long can a single audit partner be responsible for audit of a PIE?

A

7 years

28
Q

What is the cooling off period for single audit partner after auditing PIE for 7 years? (before then being able to audit same co)

A

3 years

29
Q

When a partnership is appointed as an auditor, is the partnership deemed to have been appointed, or the individual partner?

A

The partnership

30
Q

If a partnership which has been appointed ceases, the appointment is treated as having been extended to…

A

Any person who previously carried it on at that partnership
or
Any eligible partnership that has succeeded that partnership

31
Q

When is a partnership considered to have ceased in England, Wales or NI? Why do the same rules not apply in Scotland?

A

On dissolution, or when there is a change in partners
In Scotland, partnerships constitute legal persons

32
Q

Generally, can companies provide some form of liability limitation to their auditors?

A

No

33
Q

What is the UK’s ‘competent authority’ re. auditors? (regulatory body)

A

The FRC

34
Q

What is the APB?

A

Audit Practices Board

35
Q

After how many years, does the APB recommend that association with the same client is given more careful consideration?

A

10 years

36
Q

What is the APBs recommendation on the length of time an audit partner should be responsible for carrying out the audit of one PIE?

A

5 years maximum, then 5 years off

37
Q

How might an auditors appointment be terminated? (4)

A

Resignation
Removal by members
Removal on application to court
By not being re-appointed

38
Q

How does an auditor resign?

A

By giving notice to the company, confirming the date of effect

39
Q

What must accompany a notice of resignation from an auditor regarding a PIE?

A

A statement setting out reasons, and any matters that they wish to be brought to attention of members or creditors

40
Q

Rights of auditors being removed or not reappointed (2)

A

Can make representations in writing to the company, asking for these to be circulated to the shareholders
Can attend and speak at the GM at which the resolution for the removal or non-reappointment is being considered

41
Q

If an auditor send a statement explaining reasons for resignation, the company must…

A

Send a copy to every person entitled within 14 days of receipt, or apply to court for an order that it need not do so

42
Q

To who else (other than co) must an auditor send the statement explaining reasons for resignation to?

A

The appropriate audit authority

43
Q

Who are the ‘appropriate audit authorities’?

A

Either
Auditor’s recognised supervisory body
or
FRC (if company is a PIE)

44
Q

In what cases is an auditor of a private co not required to send statement setting out reasons upon resignation?

A

If at end of period for appointing auditors
If all reasons are exempt/do not need to be brought to attention of members/creditors

45
Q

Additional duties of auditors (3)

A

Form an opinion as to whether…
Adequate accounting records have been maintained
Accounts are consistent with accounting records
(Quoted co’s) Auditable part of directors’ remuneration report is consistent with accounting records

46
Q

What if the auditor cannot fulfil their additional duties?

A

They must state in their report what they cannot confirm and/or which info was missing

47
Q

Auditor’s report must state whether the accounts (3)

A

Have been prepared in accordance with relevant framework
Have been prepared in accrodance with requirements of Act and IAS Regulations (if relevant)
Have given a true and fair view of the balance sheet, p/l account, any group accounts

48
Q

What must auditor’s report say on CG statement? (if there is one) (3)

A

Whether the information given is consistent with accounts and prepared in accordance with legal requirements
Whether any material misstatements have bene identified, and the nature of each
Whether, DTR has been complies with

49
Q

What is DTR?

A

The FCA’s Disclosure Guidance and Transparency Rules

50
Q

Article 11 of the Audit Regulation introduced which new requirement for auditors of a PIE?

A

Provide a detailed audit committee report

51
Q
A

ruh oh (18 decks)

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