Responsibilities

Question 1

What are the aims of management?

Answer 1

(1) Manage the business so that its objectives and aims are achieved.
(2) Assess the risks which pose threats to these objectives and aims being met by establishing and monitoring an internal control system.

Question 2

What 4 things govern the responsibilities of the auditor?

Answer 2

(1) Scope of the Engagement
(2) Ethical Standards
(3) Quality Control Standards
(4) Laws & Regulations

Question 3

What are the 3 roles of the auditor as set out by Companies Act 2006?

Answer 3

(1) Form an independent opinion on the truth and fairness of the financial statements.
(2) Confirm that the accounts have been prepared in accordance with Companies Act 2006.
(3) Report to shareholders in the auditors report that the Directors’ statement is consistent with the accounts.

Question 4

What are the 4 roles of management as set out by Companies Act 2006?

Answer 4

(1) Safeguarding Assets
(2) Prepare and submit annual accounts to the registrar
(3) Maintain adequate accounting records
(4) Comply with laws & regulations

Question 5

How will the auditors achieve the objectives of Companies Act 2006?

Answer 5

(1) Plan the audit by assessing risks and understanding the entity
(2) Obtaining sufficient evidence
(3) Drawing valid conclusion based upon this evidence

Question 6

What is the auditor responsible for forming an opinion on?

Answer 6

Whether the financial statements are free of material misstatement whether due to fraud, error, non-compliance with laws & regulations or non-compliance with the Bribery Act 2010.

Question 7

Which ISA covers the auditors responsibilities in relation to fraud?

Answer 7

ISA 240

Question 8

What does ISA 240 identify as the two types of misstatement arising from fraud?

Answer 8

(1) Misstatements arising from fraudulent financial reporting
(2) Misstatements arsing from misappropriation of assets.

Question 9

Who is responsible for ensuring that fraud is detected and prevented?

Answer 9

Management

Question 10

What is the auditor responsible for in relation to fraud according to ISA 240?

Answer 10

Obtaining reasonable assurance that the financial statements are free material misstatement whether due to fraud or error.

Question 11

What does ISA 240 cover?

Answer 11

Explains the extent of the auditors responsibilities in preventing and detecting fraud.

Question 12

What additional governs the work of the auditor’s?

Answer 12

(1) Companies Act 2006

2) International Standards of Auditing (ISA’s