Regulatory Framework in the UK Flashcards
Main sources of audit regulation in UK?
The Companies Act 2006
Statutory Auditors and Third Country Auditors Regulations 2017
UK - ensure that good practice in ARD forms retained EU law under EU Act 2018 - this converted existing law into UK domestic law at end of transition period
This ensures law operates in UK only context
Provides continuity for businesses operating in audit sector and can benefit from global trade and investment
PIE?
Public Interest Entity
Listed entity
credit institution
Insurance undertaking
Appointment of auditor
Qualification
Independence
Remuneration
Qualification requirement?
Member of RSB - recognised supervised body
Eligible for appointment under the rules of this body
Independance requirement?
CA identifies who is ineligible - for example an officer or employee of audited person
RQB?
Recognised Qualifying Body
Issues appropriate qualifications - suitable standards for entry, examination and training
ACCA, ICAEW, CAI, AIA
RSB?
Recognised Supervised Body
recognises rules to the eligibility for auditor appointment and conduct of audit work
Auditors must…
qualify with RQB and be registered with RSB
Who appoints the auditor?
Members…..but directors can if -
it is before first period for appointing auditors
a period where there is no auditor
filling a casual vacancy for auditor
Auditors remuneration?
If appointed by members - must be fixed by the members
If appointed by directors - must be fixed by directors
Term of office of auditor?
Requirement - audit of PIE must be put out to tender at least every 10 years and auditor rotated every 20 years
Requirements for appointment in PIEs?
Before appointment…
Audit committee recommends two auditors to directors
Directors must propose auditor for appointment
- must include recommendation by audit committee in connection with appointment
- if proposal departs from preference of audit committee, must have a recommendation for a candidate appointed drawn from those in selection procedure, must have reasons for not agreeing with audit committee
Auditors report?
true and fair view
- in the balance sheet - of the state of affairs of company at end of FY
- in P&L - of profit or loss of company for financial year
Properly in accordance with relevant financial reporting framework and CA
The auditors report must…
be either unqualified or qualified
include reference to matters auditor wishes to draw attention to without qualifying report
include a statement on material uncertainty relating to doubt
identify auditors place of establishment
In the company’s annual accounts, the auditor must…
State in their opinion whether the information in strategic and director’s report is consistent with accounts and prepared with legal requirements
State whether identified material misstatements and nature of those
In the case of a quoted company the auditor must…
Report to the members on the auditable part of the directors’ remuneration report
State whether in their opinion that part of the directors’ remuneration report has been properly prepared in accordance with the Act
Where more than one person is appointed as auditor…
report must include statement as to whether all persons agree on indications given - and where cannot agree - must include opinions of each person and reason for disagreement
Rights and duties?
Section 498-502 CA
s498 Duties?
Auditor must state if they are of the opinion
that adequate records have not been kept
that the company’s accounts are not in agreement with accounting records and returns
if fail to obtain all info necessary - must state in report
s499 right to information?
has right of access at all time to company’s books, accounts etc
can require employees to provide them with information or explanation necessary for duties
s501 right to information offences?
If person knowingly or recklessly provides misleading/false/deceptive info, or fails to provide info auditor needs - offence
s502 rights in relation to resolutions and meetings?
Auditor is entitled to receive notice of all general meetings, to attend these meetings and to be heard at these meetings which concern them
s503 signature of auditor’s report?
Report must state name of auditor and must be signed and dated by them
Where auditor is a firm - must be signed by senior statutory auditor
Where more than one person is appointed as auditor - must be signed by all appointed
s507-509 offence in connection with Auditor’s report?
Person commits offence if knowingly or recklessly causes auditor’s report to include any misleading, false or deceptive info
