S2 audit regulatory framework

Question 1

what is the regulatory framework

Answer 1

agreeing terms of audit engagements
Satisfy relevant ethical requirements

Question 2

what are audit quality key drivers

Answer 2

Audit quality key drivers - holistic regulatory framework
culture within audit firm
Skills and personal qualities of partners and staff
Effectiveness of audit process
Reliability and usefulness of audit reporting
Factors outside the control of the auditors

Question 3

what are the regulation institutional elements

Answer 3

regulative - laws and legislation
Normative - professional standards and codes of conduct
Cognitive - beliefs, values and meanings
Ex-ante corporate governance - at the time of making decisions
ex=post corporate governance - oversight by regulator and corporate audit function

Question 4

what is regulation and actors

Answer 4

legislation and regulation = professional standards, legal duties
Delegated to profession (auditors) = training, leadership, quality control
Auditee = corporate governance and societal expectations
Principal = stewardship code and societal expectations of responsible investors

Question 5

what are actors in enhancing AQ

Answer 5

Directors = TCWG, run company and report truthfully, accountable for actions, responsible behaviour
Audit, auditor and audit firms = provide independent professional scrutiny of directors reporting and their businesses financial position. Powerful and ongoing incentive to improve

Question 6

what are players in enhancing AQ

Answer 6

investors = engage with company and hold them to account, vote, create long term value for clients
Regulators = hold directors, auditors and investors to account for their roles in effective corporate governance. Need powers of enforcement
Government, financial reporting council, recognised supervisory, qualifying bodies

Question 7

auditors role in regulation

Answer 7

comply with framework delegate authority to other bodies for standards and guidance
Standards, compliance, oversight

Question 8

what is FRC

Answer 8

set standards of practice and behaviour
Authorise accountants to carry out audits and offer a recognised audit qualification
Oversees AQ

Question 9

what does CA2006 say about auditing

Answer 9

requires limited companies to be audited
Small companies have exemption
Sets out auditor and director responsibilities
Eligibility to be an auditor
Must be appropriately qualified and properly supervised
Appointed by shareholders unless to casually fill a vacancy

Question 10

what is auditor removal or resignation

Answer 10

removal by resolution at company meeting
Communicated to every member of company
resignation by letter to company
Details of circumstances and request to be heard at general meeting