CH2 responsibilities

Question 1

Management’s responsibilities

Answer 1

1. Safeguard assets
2. Maintain books and records
3. Prepare FS
4. Lay FS before s/hs at AGM & file at CH
5. Sustainability:
   - Produce strategic report
   - impact of company’s ops on environment

Question 2

Auditor’s responsibilities

Answer 2

1. Form independent opinion on truth + fairness of accounts
2. Confirm annual accounts have been properly prepared in accordance with CA 2006
3. State in auditor’s report that director’s/strategic reports are consistent with the FS

Question 3

2 types of fraud

Answer 3

1. MM arising from fraudulent financial reporting
2. MM arising from misappropriation of assets

Question 4

Who do we tell if we discover fraud?

Answer 4

1. Listed company: audit committee (asap + in management letter)
2. S/hs in audit report (if FS are MM or pervasive misstatement
3. Third parties (remember confidentiality - respect it but can override if legal duty (eg ML) or prof duty (FD is fraudster - report to accounting body)

Question 5

When must RPTs be considered?

Answer 5

1. Planning
2. Testing
3. Review

Question 6

Procedures for RPTs?

Answer 6

1. Enquire of directors
2. Review minutes of board meetings
3. Review records for large/unusual transactions
4. Review investments in other companies
5. AP: compare c/y and p/y disclosures
6. Obtain list of known RPs from CH
7. Look at ICs re ID of RPs eg every new customer/supplier - consider if RP
8. Identify unusual trx and enquire
9. Director’s remuneration - check payroll records, contracts
10. Review customer/supplier lists with similar names and enquire

Question 7

What is done at review stage in respect to RPTs?

Answer 7

Management to sign written representations which has a statement regarding RPTs

Question 8

Features suggestive of RPT

Answer 8

1. Unusual terms of trade
2. Trx lack economical sense
3. Trx overly complex

Question 9

Money laundering definition

Answer 9

Using, acquiring, retaining, controlling, concealing, disguising, converting and transferring the proceeds of crime and criminal property

Question 10

How long should records for CDD and SARs be kept?

Answer 10

5 years after the end of the engagement

Question 11

Penalty for ML?

Answer 11

Jail term of up to 14 years

Question 12

Where does our responsibility regarding ML come from?

Answer 12

Proceeds of Crime Act

Question 13

Key point in ML qu

Answer 13

1. Responsibility under Proceeds of Crime Act
2. Report to MLNO
3. They decide whether to report to NCA via SAR
4. Report ASAP or failure to report
5. Report with discretion or tipping off