A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not s...
A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not s...
A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not s...
A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not s...
A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not s...
A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not s...
A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not s...
A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not s...
A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not s...
A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not s...
A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not s...
A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not s...
A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not s...
A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not s...
A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not s...
A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not s...
A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not s...
A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not s...
A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not s...
A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not s...
A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not s...
A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not s...
A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not s...
A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not s...
A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not s...
A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not s...
A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not s...
A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not s...
A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not s...
A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not s...
A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not s...
A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not s...
A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not s...
A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not s...
A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not s...
A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not s...
A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not s...
The New Clarity ISAs (UK and Ireland)
The New Clarity ISAs (UK and Ireland)
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The New Clarity ISAs (UK and Ireland)

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Des O’Neill of OmniPro delivers this 1 Hour Online CPD Course on The New Clarity ISAs (UK and Ireland) are effective for periods ending on or after 15th of December 2010. These new standards have a significant impact on Audits and Auditors.


This course introduces the standards from a practical perspective and identifies the key changes and differences between the New Clarity ISAs and the old ISAs.

What the Clarity project practically means and how the standards have changed
Which standards have been revised as well as clarified
What the impact is of the new standards introduced by going through each of the revised standards

Published in: Education, Business, Technology
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Transcript of "The New Clarity ISAs (UK and Ireland)"

  1. 1. A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not serve as proof of completion alone. In Association with:- Online CPD for Accountants & Professional Advisors The New Clarity ISAs (UK and Ireland) Presenter: Des O’Neill CPA; A.C.I.S; ACCA CPDStore.com Unit 3, South Court, Block D, Iveagh Court, Wexford Road Business Park, 5 – 8 Harcourt Road, Carlow. Dublin 2. 059 9183888 01 4110000 www.OmniPro.ie www.CPDStore.com
  2. 2. A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not serve as proof of completion alone. Forming Audit Opinions Contents Page An introduction to Auditing Under the Clarity ISAs 1 Irish Audit Resource List 2011 14 Audit Engagement Letter 18 Fraud Checklist 33 Index ISA Audit Guide for SMPs 36 PN 26 Revised Small Entity Audit Documentation 40
  3. 3. A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not serve as proof of completion alone. An Introduction to the Clarity Auditing Standards • The Auditing Standards • The Bulletins and Guidance Documents • Gathering and Documenting the Evidence • Issues arising in Monitoring Visits An Introduction to the Clarity Auditing Standards • ISA 200 - The Overall Objectives of the Independent Auditor • ISA 210 – Agreeing the terms of Audit Engagements • ISA 220 – Quality Control for an Audit of Financial Information OmniPro Education & Training 1 of 132
  4. 4. A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not serve as proof of completion alone. An Introduction to the Clarity Auditing Standards • ISA 240 – The Auditors Responsibility in Relation to Fraud • The IFAC Guidance for SME Implementation of the Clarity ISAs • Practice Note 26 Guidance on Smaller Entity Audit Documentation ISA 200 – Overall objectives of the Independent Auditor and the conduct of an audit in accordance with the ISAs • Clarify overall objectives of the auditor • The nature and scope of an audit • How the audit meets the objectives of the auditor • purpose of the objectives that are included in all of the other standards • Purpose of an audit – enhance the degree of confidence of intended users of the financial statements ISA 200 – Overall objectives of the Independent Auditor and the conduct of an audit in accordance with the ISAs • To obtain reasonable assurance that the financial statements • Are free from material misstatement either due to fraud or error • Enabling the auditor form an opinion that the FS are prepared in all material respects • In accordance with the applicable financial reporting framework OmniPro Education & Training 2 of 132
  5. 5. A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not serve as proof of completion alone. ISA 200 – Overall objectives of the Independent Auditor and the conduct of an audit in accordance with the ISAs • To report on the financial statements and communicate as required • If reasonable assurance can not be obtained and a qualified opinion is deemed insufficient • Auditor should disclaim the opinion • Or withdraw/resign from the engagement (if legally possible) ISA 200 – Overall objectives of the Independent Auditor and the conduct of an audit in accordance with the ISAs • Preparation of the Financial Statements • Audit by “independent auditor” is premised on the fact that the financial statements are prepared and presented by the management of the entity • Audit does not relieve those charged with governance of their responsibilities • They are responsible for making all the required information available • Management acknowledge and understand their responsibilities • ISA 210 ISA 200 – Overall objectives of the Independent Auditor and the conduct of an audit in accordance with the ISAs • ISAs are designed to support the obtaining of reasonable assurance by the auditor – Identify and assess the risks of material misstatement – Obtain audit evidence about risks and whether they have given rise to material misstatement in order to reduce risk to an acceptably low level – Form an opinion on the FS based on conclusions drawn from evidence obtained OmniPro Education & Training 3 of 132
  6. 6. A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not serve as proof of completion alone. ISA 200 – Overall objectives of the Independent Auditor and the conduct of an audit in accordance with the ISAs • Fundamental Underlying Concepts – Materiality (ISA 320) – Audit risk (ISA 315) – Sufficiency and appropriateness of audit evidence (ISA 500 & ISA 300) – Professional judgement – Professional scepticism – Inherent limitations of the audit – Independence (IFAC Code of Ethics) ISA 200 – Overall objectives of the Independent Auditor and the conduct of an audit in accordance with the ISAs • Risk – ISA 315 • Material misstatements – Overall financial statement level – Assertion level • Audit risk • Detection risk • Inherent risk • Control risk • Detection risk ISA 200 – Overall objectives of the Independent Auditor and the conduct of an audit in accordance with the ISAs • Sufficiency & Appropriateness of Audit Evidence – ISA 500 + ISA 300 • Audit procedures performed during the audit • Information that supports and corroborates management assertions • Quantity • Quality • Feeds professional judgment OmniPro Education & Training 4 of 132
  7. 7. A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not serve as proof of completion alone. ISA 200 – Overall objectives of the Independent Auditor and the conduct of an audit in accordance with the ISAs • Professional scepticism – ISA 240 • An attitude • Critical assessment • Questioning mind • Validity of evidence obtained • Hidden circumstances • Contradictory evidence • Alertness • Belief in genuine documents unless information to the contrary ISA 200 – Overall objectives of the Independent Auditor and the conduct of an audit in accordance with the ISAs • Professional Skepticism – Reliability of documents – Contradictory evidence – Possible fraud – Overlooking unusual circumstances – Over generalising – Inappropriate assumptions ISA 200 – Overall objectives of the Independent Auditor and the conduct of an audit in accordance with the ISAs • Professional Judgement – Materiality (ISA 320) – Audit risk (ISA 315) – Nature, timing and extent of audit procedures (ISA 330) – Evaluating appropriateness and sufficiency of audit evidence (ISA 500) OmniPro Education & Training 5 of 132
  8. 8. A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not serve as proof of completion alone. ISA 200 – Overall objectives of the Independent Auditor and the conduct of an audit in accordance with the ISAs • Professional Judgment • Application of relevant knowledge and experience – Auditing standards, ethical standards, accounting standards • Informed decisions • Drawing of conclusions based on evidence obtained • Personal quality – personal differences – reasonable to expect common views with fellow auditors based on facts and circumstances ISA 200 – Overall objectives of the Independent Auditor and the conduct of an audit in accordance with the ISAs • Inherent Limitations of an Audit • Nature and characteristics of financial reporting and business processes • The nature of the audit evidence and procedures • Reasonable time scale for execution • Cost V Benefit • Future viability • Management efficiency • All laws and regulations • Can not conclusively test all transactions ISA 200 – Overall objectives of the Independent Auditor and the conduct of an audit in accordance with the ISAs • Inherent Limitations • Fraud – collusion or senior management (ISA 240) • Related party transactions – existence and completeness (ISA 550) • Laws and regulations – compliance (ISA 250) • Going concern – future events or conditions (ISA 570) OmniPro Education & Training 6 of 132
  9. 9. A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not serve as proof of completion alone. ISA 200 – Overall objectives of the Independent Auditor and the conduct of an audit in accordance with the ISAs • Independence • Ethical requirements • ISQC1 • ISA 220 • Quality control procedures • Unimpaired • Uncompromised • Prejudiced • Influenced ISA 200 – Overall objectives of the Independent Auditor and the conduct of an audit in accordance with the ISAs • Ethical Requirements • Integrity • Objectivity • Professional Competence and Due Care • Confidentiality • Professional Behaviour ISA 200 – Overall objectives of the Independent Auditor and the conduct of an audit in accordance with the ISAs • Complying with ISAs Relevant to the Audit • Satisfy the objectives stated in the individual ISAs • Comply with the relevant requirements • Respond appropriately when there is failure to achieve an audit objective OmniPro Education & Training 7 of 132
  10. 10. A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not serve as proof of completion alone. ISA 200 – Overall objectives of the Independent Auditor and the conduct of an audit in accordance with the ISAs • Determine whether any audit procedures in addition to those required by the ISAs are necessary in pursuance of the objectives stated in the ISAs; ISA 200 – Overall objectives of the Independent Auditor and the conduct of an audit in accordance with the ISAs • Small Entity Considerations – Straightforward or uncomplicated transactions – Simple record keeping – Few lines of business – Few internal controls – Few levels of management with responsibility for a broad range of controls – Few personnel with wide ranging duties The Audit Overview 1. Accept the audit and comply with the ethical standards 2. Plan our approach identifying risk areas but focussing on our overall objective to form an opinion. 3. Set overall strategy responding to assessed risks 4. Identify risks by gaining an understanding of the entity 5. Assess possibility of fraud 6. Devise and set out testing to achieve our objectives responding to risks in accordance with ISAs OmniPro Education & Training 8 of 132
  11. 11. A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not serve as proof of completion alone. The Audit Overview 7. Do the testing and gather the evidence based on our plan 8. Continually ensuring that quality control procedures are being applied and complied with 9. Pay specific attention to areas of risk and perform specific additional testing required to enable us form overall opinion in this area 10. Reach conclusions based on testing done and evidence gathered and form an opinion 11. Issue an audit report ISA 210 – Agreeing the terms of Audit Engagements • Determine whether financial reporting framework to be applied in the preparation of the financial statements is acceptable • Obtain agreement of management that it acknowledges and understands its responsibility for ISA 210 – Agreeing the terms of Audit Engagements • Preparation of financial statements in accordance with relevant financial reporting framework and fair presentation • Internal controls as management determines necessary to enable the preparation of the financial statements that are free from material misstatement whether due to fraud or error OmniPro Education & Training 9 of 132
  12. 12. A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not serve as proof of completion alone. ISA 210 – Agreeing the terms of Audit Engagements • Access to all information which management is aware is relevant to the preparation of the financial statements • Additional information which the auditor may request for the purpose of the audit • Unrestricted access to persons within the entity from whom the auditor determines necessary to obtain audit evidence ISA 210 – Agreeing the terms of Audit Engagements • Letter of engagement clarifies responsibilities at outset • ISA 580 Written Representations • Confirmation at conclusion of audit ISA 220 – Quality Control for an Audit of Financial Statements • The auditor must implement quality control procedures at engagement level that provide the auditor with reasonable assurance that • The audit complies with professional standards and applicable legal and regulatory requirements • The audit report issued is appropriate OmniPro Education & Training 10 of 132
  13. 13. A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not serve as proof of completion alone. ISA 220 – Quality Control for an Audit of Financial Statements • Responsibilities or firm personnel in relation to quality control for audits • In conjunction with Ethical standards • ISQC1 • Firm must establish a system of quality control designed to provide with assurance – Firm and personnel complies with professional standards and regulatory and legal requirements – Audit reports issued are appropriate ISA 220 – Quality Control for an Audit of Financial Statements • Engagement teams • Implement quality control procedures • Provide firm with relevant information to ensure system of quality control works • Rely on the firm’s systems unless otherwise advised ISA 220 – Quality Control for an Audit of Financial Statements • Establish leadership responsibilities for quality on audits • Engagement partner responsible for overall leadership in relation to ensuring quality of the audit • Ethical considerations are considered and complied with • Parts A&B of IFAC Code of Ethics – Integrity, objectivity, professional competence and due care, confidentiality, professional behaviour, independence OmniPro Education & Training 11 of 132
  14. 14. A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not serve as proof of completion alone. ISA 220 – Quality Control for an Audit of Financial Statements • Partner evaluates and observes ethical compliance and independence of team through • Obtaining information and evaluating circumstances and relationships through formal and informal enquiry • Evaluating information in relation to confirmed breaches • Taking appropriate action to eliminate threats and safeguards ISA 220 – Quality Control for an Audit of Financial Statements • Acceptance and continuance of the audit engagement – Integrity of business owners – Competent audit team – Ethical considerations met – Significant matters arising in current or previous audits – Understanding and knowledge of the client – Internal quality control procedures ISA 220 – Quality Control for an Audit of Financial Statements • Assignment of Engagement Teams • Understanding & practical experience through partaking in similar audits and appropriate training and participation • Understanding of professional standards & regulatory requirements • Technical knowledge and expertise • Knowledge of sector • Ability to apply professional judgement • Understanding of firm’s quality control policies OmniPro Education & Training 12 of 132
  15. 15. A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not serve as proof of completion alone. ISA 220 – Quality Control for an Audit of Financial Statements • Engagement partner takes responsibility for direction, supervision and performance of the audit • Before forming and issuing opinion has sufficient appropriate audit evidence been obtained • Have the audit team undertaken consultation where appropriate ISA 220 – Quality Control for an Audit of Financial Statements • Engagement Quality Control Review • Matters of significant judgement • Areas of risk • Corrected and uncorrected misstatements • Audit findings letters • Listed entities and others deemed appropriate • Quality control reviewer appointed • Discuss issues as they arise • Not date the auditors report until quality control review completed ISA 220 – Quality Control for an Audit of Financial Statements • Documentation required • Issues identified – Compliance – Ethical requirements • Conclusions on issues identified • Conclusions regarding acceptance and continuance • Nature and scope of and conclusions relating to consultations undertaken during the course of the audit engagement • Engagement quality control reviewer commentary and outcomes and responses OmniPro Education & Training 13 of 132
  16. 16. A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not serve as proof of completion alone. Common Potential Ethical Threats • Business, personal, family relationships • Long association with the audit engagement • Fee dependency • Providing of non audit services ISA 230 Audit Documentation • Prepare documentation • Sufficient appropriate record for the basis of the auditor’s report • Evidence that the audit was planned and performed in accordance with the ISAs and applicable and regulators requirements ISA 230 Audit Documentation • The auditor shall prepare documentation that is sufficient to enable an experienced auditor, having no previous connection with the audit to understand • The nature, timing and extent of the audit procedures performed • The results of the audit procedures performed and the evidence obtained • Significant matters arising during the audit, the conclusions reached and the professional judgement excercised OmniPro Education & Training 14 of 132
  17. 17. A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not serve as proof of completion alone. ISA 230 Audit Documentation • Identifying characteristics of the specific items or matters tested • Who performed the audit work and the date such work was completed • Who reviewed the audit work performed and the date and extent of such review ISA 230 – Audit Documentation • Audit files should be assembled and finalised on a timely basis after the date of the auditors report – (60 Days) • No documentation or information shall be deleted or removed from the file and amendments to existing documentation and additions should be clearly noted Documentation of Audit Procedures • The size and complexity of the entity • The nature of the audit procedures to be performed • The identified risks • The significance of audit evidence obtained • The nature and extent of exceptions • Documented conclusions and basis for conclusions • Audit methodology and tools used • Documentation of significant matters OmniPro Education & Training 15 of 132
  18. 18. A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not serve as proof of completion alone. ISA 240 - The Auditors Responsibilities Relating to Fraud in an Audit of Financial Statements • Auditors Objectives • Identify and assess the risks of material misstatement due to fraud • Obtain sufficient appropriate audit evidence by designing and implementing appropriate responses • Respond to suspected fraud identified Professional Scepticism • To be maintained throughout the audit • Irrespective of past experiences • Honesty and integrity of management • Previous experience contributes to understanding of the entity • Unless auditor has reason to believe to the contrary the auditor may accept documents as genuine • A questioning mind The Fraud Detection Process • Discussion among the team • Risk assessment procedures – Enquiries of management – Enquiries of staff – financial reporting and non financial at all levels – The process and system for detecting fraud – The communication process in relation to fraud – Those charged with governance – Unusual or unexpected relationships – Evaluation of fraud risk factors OmniPro Education & Training 16 of 132
  19. 19. A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not serve as proof of completion alone. Using ISA 240 - Fraud • What are we looking for when we are assessing Fraud Risk Factors? – Appendix 1 ISA 240 • What audit procedures can we implement to address the assessed Fraud Risks Factors? – Appendix 2 ISA 240 • What Circumstances Indicate a Possibility of Fraud? – Appendix 3 ISA 240 ISA 240 • Written representations – management and those charged with governance – Acknowledge responsibility for the design, implementation and maintenance of internal control to prevent and detect fraud – Disclose to auditor result of managements assessment of risk that FS have been materially misstated as a result of fraud ISA 240 • Written representations • Knowledge of fraud or suspected fraud – Management – Employees who have significant roles in internal control – Others where fraud could have a material effect on the financial statements • Knowledge of allegations of fraud or suspected fraud communicated by employees, former employees, regulators or others. OmniPro Education & Training 17 of 132
  20. 20. A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not serve as proof of completion alone. Fraud Risk Factors for SMEs • Poor trading results, significant losses, possible liquidation • Significant related party transactions with un-audited entities • Domination of management by a single person or group of people • Ineffective internal controls and system weaknesses • Large amounts of cash • Large number of small stock items • Lack of control over assets and stock Engagement Team Meeting • Exchange of ideas and responses to potential frauds • Opportunity for more experienced team members to share their ideas • Known external and internal factors including culture and environment • Managements involvement in overseeing employees • Consideration of unusual or unexplained changes in behaviour or lifestyle of employees ISA 240 - Fraud • Audit team discuss and assess likelihood • Inquire of management and all relevant parties • Documentation of internal controls • Random approach to and nature of audit testing • Specific testing at assertion level • Assess possibility of management override • Withdraw from engagement if necessary and communicate with appropriate parties OmniPro Education & Training 18 of 132
  21. 21. A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not serve as proof of completion alone. ISA 240 - Fraud • Management Override • Irrespective of overall risk assessment • Substantive testing on journal entries • Review of estimates • Obtain an understanding of the entity to the extent that you would be able to identify unusual patterns, trends or transactions • Revenue recognition Revenue Recognition • Shifting revenue to future periods • Not recognising all revenues in the current period • To be supported by calculations and basis for assumption where the conclusion is reached that there is no risk of material misstatement Audit Procedures to Address Fraud Risk Factors • Location visits and surprise or unannounced tests • Interviews of personnel • Cut off testing • Substantive P&L & System testing • Cash counts • Random sample selection for testing purposes – Not tested due to materiality or risk, different timing methods, different sampling methods • 3rd party confirmations OmniPro Education & Training 19 of 132
  22. 22. A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not serve as proof of completion alone. Commonly Overlooked Fraud Indicators • Discrepancies in accounting records • Missing documents • Inconsistent or vague management and/or employee responses • Denial of access to records and information on a timely basis • Large number of credit entries • Transactions not recorded on a timely basis • Unwillingness to address system weaknesses Guidance on Applying the International Auditing Standards to SMEs • Produced by Canadian Institute of Chartered Accountants under the guidance of IFAC SMP committee • Help practitioners understand and consistently implement the ISAs on SME audits • How to approach for risk based audits • Practical aids and guidance • Case study IFAC Guidance on Applying the International Auditing Standards to SMEs • Overview • The Audit Process • Basic Concepts • Risk Assessment • Risk Response • Reporting OmniPro Education & Training 20 of 132
  23. 23. A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not serve as proof of completion alone. Practice Note 26 - Guidance on Smaller Entity Audit Documentation • Developed by APB • Released September 2007 • Revised December 2009 • Useable for larger entities • Does not replace standards only supports them • Particular focus on the planning section Practice Note 26 - Guidance on Smaller Entity Audit Documentation • Purposes of audit documentation • Assist the team plan and perform the audit • Enable supervision and direction of the audit • Enable the team be accountable for their work • Record matters of continuing significance • Enable ISQC1 compliance reviews • Facilitate conducting external inspections Practice Note 26 - Guidance on Smaller Entity Audit Documentation • Special considerations for smaller entity audits • Provision of accounting and related business advice • Small team size • Use of proprietary audit systems • Concentration of ownership and management • Uncomplicated operations OmniPro Education & Training 21 of 132
  24. 24. A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not serve as proof of completion alone. Practice Note 26 - Guidance on Smaller Entity Audit Documentation • Simple accounting systems • Relatively small number and informal nature of controls • Nature of the relationship between smaller entities and their auditors • Relatively small team size • Use of proprietary audit systems Practice Note 26 - Guidance on Smaller Entity Audit Documentation • A road map of what is required step by step • File assembly • Changes to documentation after the date of the audit report • Illustrative examples of documentation standard required OmniPro Services • Assist Accountants • Maximise profitability • Improve quality of customer service • Be compliant – Institute, audit company & law • Achieve success • Gain peace of mind • The Accountants Resource Centre OmniPro Education & Training 22 of 132
  25. 25. A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not serve as proof of completion alone. Accountants Resource Centre • Large Company Audit File – Programmes and the integrated working papers and file • Small Company Audit File – Programmes and the integrated working papers and file • Audit Exempt, Sole Trader, Property Management and Charity File • ISQC1 Manual Sole Practitioner and Partner • Template letters and communications • Ongoing technical updates • Members forum • Coming 2011 Audit Report Tracker OmniPro Services • OmniPro Corporate Consultants – Company Formation Services • Standard Formations for €250.00 (incl VAT) • 24 Hour Turn Around – Company Secretarial Services • Annual Compliance • All Company Secretarial Special Assignments • Company Secretarial Training • Next Door to the Companies Registration Office OmniPro Services • OmniPro Practice Support – Pre-Monitoring Visits – Strategic Planning & Implementation – Practice Development – Practice Sale, Purchase & Merger – In House Training – File Review Services • OmniPro Strategic Solutions – Product & Marketing Solutions to Build Business Advisory Fees – Practice Growth Solutions OmniPro Education & Training 23 of 132
  26. 26. A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not serve as proof of completion alone. OmniPro Services • OmniPro Education & Training – Professional CPD Seminars • Technical CPD • Personal Development Training for Accountants – Time management, business communication skills, Presentation skills, team leadership, management development • In House Training OmniPro Supporting Irish Accountants Iveagh Court Unit 3 South Court, Harcourt Road Wexford Road Business Park, Dublin 2 Carlow. mkane@omnipro.ie doneill@omnipro.ie gwynne@omnipro.ie 01 4110000 059 9183888 OmniPro Education & Training 24 of 132
  27. 27. A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not serve as proof of completion alone. Auditors Resource List 2011Title Description Source Download1 International Standards on Auditing 2010 Handbook of International Quality Control, Auditing, Review, Other Assurance, and Related Services Pronouncements IAASB http://web.ifac.org/publications General Principles and Responsibilities Overall Objectives of the Independent Auditor and the Conduct of an Audit in200 Accordance with the International Standards on Auditing IAASB http://web.ifac.org/publications210 Agreeing the Terms of Audit Engagements IAASB http://web.ifac.org/publications220 Quality Control for an Audit of Financial Information IAASB http://web.ifac.org/publications230R Audit Documentation IAASB http://web.ifac.org/publications240 The Auditors Responsibilities relating to Fraud in an Audit of Financial Statements IAASB http://web.ifac.org/publications250 Consideration of Laws and Regulations in an Audit of Financial Statements IAASB http://web.ifac.org/publications260 Communication With Those Charged with Governance IAASB http://web.ifac.org/publications Communicating Deficiencies in Internal Control to Those Charged with265 Governance and Management Risk Assesment and Response to Assessed Risks300 Planning an Audit of Financial Statements IAASB http://web.ifac.org/publications Identifying and Assessing the Risks of Material Misstatement through315 Understanding the Entity and Its Environment IAASB http://web.ifac.org/publications320 Materiality in Planning and Performing an Audit IAASB http://web.ifac.org/publications330 The Auditors Responses to Assessed Risks IAASB http://web.ifac.org/publications402 Audit Considerations Relating to an Entity Using a Service Organisation IAASB http://web.ifac.org/publications450 Evaluation of Misstatements Identified During the Audit IAASB http://web.ifac.org/publications Audit Evidence500 Audit Evidence IAASB http://web.ifac.org/publications501 Audit Evidence - Specific considerations for Selected Items IAASB http://web.ifac.org/publications505 External Confirmations IAASB http://web.ifac.org/publications510 Initial Engagements - Opening Balances IAASB http://web.ifac.org/publications520 Analytical Procedures IAASB http://web.ifac.org/publications530 Audit Sampling IAASB http://web.ifac.org/publications Audit of Accounting Estimates, Including Fair Value Accounting Estimates, and540 Related Disclosures IAASB http://web.ifac.org/publications550 Related Parties IAASB http://web.ifac.org/publications560 Subsequent Events IAASB http://web.ifac.org/publications570 Going Concern IAASB http://web.ifac.org/publications580 Written Representations IAASB http://web.ifac.org/publications Using the Work of Others www.omnipro.ie OmniPro Education & Training 25 of 132
  28. 28. A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not serve as proof of completion alone. Speicial Considerations - Audits of Group Financial Statements (Including the600 Work of Component Auditors) IAASB http://web.ifac.org/publications610 Considering the Work of Internal Auditors IAASB http://web.ifac.org/publications620 Using the work of an Auditors Expert IAASB http://web.ifac.org/publications Audit Conlusions and Reporting700 Forming an Opinion and Reporting on Financial Statements IAASB http://web.ifac.org/publications705 Modifications to the Opinion in the Independent Auditors Report IAASB http://web.ifac.org/publications Emphasis of Matter Paragraphs and Other Matters Paragraphs in the Independent706 Auditors Report IAASB http://web.ifac.org/publications Comparative Information - Correpsonding Figures and Comparative Financial710 Statements IAASB http://web.ifac.org/publications The Auditors Responsibilities Relating to Other Information in Documents720 Containing Audited Financial Statements IAASB http://web.ifac.org/publications Specialised Areas Audits of Financial Statements Prepared in Accordance with Special Purpose800 Frameworks IAASB http://web.ifac.org/publications Audits of Single Financial Statements and Specific Elements, Accounts or Items of805 a Financial Statement IAASB http://web.ifac.org/publications810 Engagements to Report on Summary Financial Statements IAASB http://web.ifac.org/publications2 Ethics 2010 Handbook of Code of Ethics for Professional Accountants IFAC http://web.ifac.org/publications3 Bulletins2006-1 Auditors Reports on Financial Statements in ROI APB http://www.frc.org.uk/apb/publications/bulletins.cfm?Start=1 Audit Issues when Financial Market Conditions are Difficult and Credit Facilities2008-1 may be restricted APB http://www.frc.org.uk/apb/publications/bulletins.cfm?Start=12008-10 Going Concern issues during the Current Economic Conditions APB http://www.frc.org.uk/apb/publications/bulletins.cfm?Start=12009-2 Auditors Reports on Financial Statements in the United Kingdom APB http://www.frc.org.uk/apb/publications/bulletins.cfm?Start=14 Practice NotesPN 09 Reports by Auditors under Companies Legislation in ROI APB http://www.frc.org.uk/apb/publications/practice.cfmPN 11 The audit of Charities in UK APB http://www.frc.org.uk/apb/publications/practice.cfmPN 15 The audit of Occupational Pension Schemes APB http://www.frc.org.uk/apb/publications/practice.cfmPN 16 Bank Reports for Audit Purposes in UK APB http://www.frc.org.uk/apb/publications/practice.cfmPN 19 The Audit of Banks APB http://www.frc.org.uk/apb/publications/practice.cfmPN 20 The Audit of Insurers APB http://www.frc.org.uk/apb/publications/practice.cfmPN 21 Audit of Investment Businesses in UK APB http://www.frc.org.uk/apb/publications/practice.cfmPN 22 Auditors Consideration of FRS 17 Retirement Benefits Defined Pension Schemes APB http://www.frc.org.uk/apb/publications/practice.cfmPN 23 Auditing Complex Financial Instruments (Interim Guidance) APB http://www.frc.org.uk/apb/publications/practice.cfmPN 24 Audit of Friendly Societies in UK APB http://www.frc.org.uk/apb/publications/practice.cfmPN 25 Attendance at Stock Taking APB http://www.frc.org.uk/apb/publications/practice.cfmPN 26 Guidance on Smaller Entity Audit Documentation (Revised Dec 2009) APB http://www.frc.org.uk/apb/publications/practice.cfm www.omnipro.ie OmniPro Education & Training 26 of 132
  29. 29. A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not serve as proof of completion alone.PN 27 The Audit of Credit Unions APB http://www.frc.org.uk/apb/publications/practice.cfm5 Miscellaneous Technical StatementsM01 Auctioneer and House Agents Acts 1947 and 1967 CCABI Institute WebsiteM09 Accouting for goods sold subject to reservation of title CCABI Institute WebsiteM21 Directors obligation under Section 40 of the Companies (Amendment) Act 1983 CCABI Institute WebsiteM22 Credit Unions - ROI CCABI Institute Website Accountants report on license applications to Department of Tourism, TransportM27 and Communications Dublin CCABI Institute WebsiteM31 Accounting for redemption and purchase of own shares by companies in ROI CCABI Institute WebsiteM32 Related party disclosures CCABI Institute WebsiteM35 Solicitors accounts Regulations 1998 - Northern Ireland CCABI Institute WebsiteM37 Restoration of companies to register - ROI CCABI Institute WebsiteM38 Solicitors accounts regulations 2001 - ROI CCABI Institute WebsiteM39 Reporting to third parties CCABI Institute Website Chartered Accountants reports on compilation of financial statements ofM41 incorporated entities CCABI Institute WebsiteM42 Anti Money Laundering Guidance in ROI CCABI Institute WebsiteM43 Compilation of alternative annual reports of certain pension schemes in ROI CCABI Institute Website Guidance reporting Guidance Notes 1 05 UCITS Publication of a simplifiedM44 prospectus issued by Financial Regulator CCABI Institute WebsiteM45 Grant claims CCABI Institute Website Reporting to Financial Regulator under Central Bank and Financial ServicesM46 Authority of Ireland Act 2004 revised January 2005 CCABI Institute Website Guidance for reporting in accordance with client money regulations issued byM47 Financial Regulator February 2004 CCABI Institute Website Chartered Accountants Reports on compilation of Historical Financial informationM48 of Unincorporated Entities CCABI Institute Website6 General ISQC1 International Standard on Quality Control IAASB http://www.ifac.org/Guidance/EXD-Details.php?EDID=0086 Guide to Using the ISAs for SMEs IFAC http://www.ifac.org/Members/DownLoads/ISA_Audit_Guide.pdf Guide to Quality Control for SMEs Applying ISAs Proportionately with the Size and Complexity of an Entity IFAC http://web.ifac.org/publications/international-auditing-and-assurance-standards-board Audit Considerations in Respect of Going Concern in the Current Economic Environment IFAC http://web.ifac.org/publications/international-auditing-and-assurance-standards-board Emerging Practical Issues Regarding the use of External Confirmations in the Audit of Financial Statements IFAC http://web.ifac.org/publications/international-auditing-and-assurance-standards-board Challenges in Auditing Fair Value Accounting Estimates in the Current Market Environment IFAC http://web.ifac.org/publications/international-auditing-and-assurance-standards-board The Role of Small and Medium Practices in providing Business Support to Small and Medium sized Enterprises IFAC http://web.ifac.org/publications/small-and-medium-practices-committee Quality Control for Small and Medium Sized Practices IFAC http://web.ifac.org/publications/small-and-medium-practices-committee www.omnipro.ie OmniPro Education & Training 27 of 132
  30. 30. A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not serve as proof of completion alone. LTD CO AUDIT LETTER OF ENGAGEMENT EXAMPLE The Directors, XYZ Limited XYZ Address Line 1, XYZ Address Line 2, XYZ Address Line 3. DATE Dear Sirs XYZ LIMITED AUDIT PERIOD ENDED 30th June 2011 The purpose of this letter is to set out the basis on which we are to act as auditors of the above company and the respective areas of responsibility of the directors and of ourselves. AUDIT DUTIES & RESPONSIBILITIES OF DIRECTORS • Our audit will be conducted on the basis that [management and, where appropriate, those charged with governance] acknowledge and understand that they have responsibility: a) For maintaining proper accounting records and preparing financial statements which give a true and fair view and comply with the Companies Acts 1963 to 2009; b) For the preparation and fair presentation of the financial statements in accordance with [International Financial Reporting Standards] or [the accounting standards issued by the Accounting Standards Board (Generally Accepted Accounting Practice in Ireland)]; c) For such internal control as [management] determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error; and d) To provide us with: i. Access to all information of which [management] is aware that is relevant to the preparation of the financial statements such as records, documentation and other matters; ii. Additional information that we may request from [management] for the purpose of the audit; and iii. Unrestricted access to persons within the entity from whom we determine it necessary to obtain audit evidence. • As part of our audit process, we will request from [management and, where appropriate, those charged with governance], written confirmation concerning representations made to us in connection with the audit. • You are also required to inform us of any material event occurring between the date of our report and that of the AGM which may affect the financial statements. OmniPro Education & Training 28 of 132
  31. 31. A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not serve as proof of completion alone. LTD CO AUDIT LETTER OF ENGAGEMENT EXAMPLE • We look forward to full cooperation from your staff during our audit. DUTIES AND RESPONSIBILITIES OF AUDITORS: OPTION 1 • We are registered for audit purposes with the Chartered Accountants Ireland /Institute of Chartered Certified Accountants and this registration extends to audits carried out in both the Republic of Ireland and the United Kingdom. OR OPTION 2 • We are registered for audit purposes in the Republic of Ireland with Certified Public Accountants or the Institute of Incorporated Public Accountants. • We have a statutory responsibility to report to the members whether in our opinion the financial statements give a true and fair view and whether they have been properly prepared in accordance with the Companies Acts 1963 to 2009. In arriving at our opinion, we are required to consider the following matters and to report on: o whether proper accounting records have been kept by the company; o whether the company balance sheets and profit and loss accounts are in agreement with the accounting records and returns; o whether we have obtained all the information and explanations which we consider necessary for the purposes of our audit; o whether the information given in the directors’ report is consistent with the financial statements; and o whether there existed at balance sheet date a financial situation which, under section 40(1) of the Companies (Amendment) Act 1983, would require the convening of an extraordinary general meeting of the company. • In addition, there are certain other matters which, according to the circumstances, may need to be dealt with in our report. For example, where the financial statements do not give full details of directors’ remuneration or of their transactions with the company, the Companies Acts, 1963 to 2009 require us to disclose such matters. • We have a responsibility under the Companies Act, 1990 (the “Act”) to serve notice on the company if we form the opinion that the company is contravening Section 202 of the Act in relation to the maintenance of proper books of account. Where, following receipt of notice of such contravention, you do not take steps within 7 days to ensure that proper books of account are kept, we have a duty to notify the Registrar of Companies. • We have a professional responsibility to report if the financial statements do not comply in any material respect with applicable accounting standards, unless in our opinion the non-compliance is justified in the circumstances. In determining whether or not the departure is justified we consider: o whether the departure is required in order for the financial statements to give a true and fair view; and OmniPro Education & Training 29 of 132
  32. 32. A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not serve as proof of completion alone. LTD CO AUDIT LETTER OF ENGAGEMENT EXAMPLE o whether adequate disclosure has been made concerning the departure. • Our report will be made solely to the company’s members, as a body, in accordance with Section 193 of the Companies Act, 1990. Our audit work will be undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. In those circumstances, to the fullest extent permitted by law, we will not accept or assume responsibility to anyone other than the company and the company’s members as a body for our audit work, for the audit report, or for the opinions we form. The form and content of our report may need to be amended in light of our audit findings. • We will express an unqualified opinion when the financial statements give a true and fair view in accordance with the financial reporting framework. Any modification to this unqualified audit opinion will be expressed in our auditor’s report and in the audit findings letter. • Our professional responsibilities also include: o stating in our report a description of the directors’ responsibilities for the financial statements where the financial statements or accompanying information do not include such a description; and o considering whether other information in documents containing audited financial statements is consistent with those financial statements. SCOPE OF AUDIT • We have been requested to audit the financial statements of XYZ Limited, which comprise the balance sheet as at 30 June 2011, the profit and loss account, a statement of total recognised gains and losses and a cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory information. • We are pleased to confirm our acceptance and our understanding of this audit engagement by means of this letter. Our audit will be conducted with the objective of our expressing an opinion on the financial statements. • We will conduct our audit in accordance with International Standards on Auditing (UK and Ireland) (ISAs) issued by the Auditing Practices Board and will have regard to relevant Auditing Guidelines, regulations and recommendations issued by the Auditing Practices Board and other professional bodies. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. • The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. • Because of the inherent limitations of an audit, together with the inherent limitations of internal control, there is an unavoidable risk that some material misstatements may not OmniPro Education & Training 30 of 132
  33. 33. A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not serve as proof of completion alone. LTD CO AUDIT LETTER OF ENGAGEMENT EXAMPLE be detected, even though the audit is properly planned and performed in accordance with ISAs. • In making our risk assessments, we consider internal control relevant to the entity’s preparation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. However, we will communicate to you in writing concerning any significant deficiencies in internal control relevant to the audit of the financial statements that we have identified during the audit. • We appreciate that the present size of your business renders it uneconomic to create a system of internal control based on the segregation of duties for different functions within each area of the business. In the running of the company we understand that the directors are closely involved with the control of the companys transactions. In planning and performing our audit work we shall take account of this supervision. We may ask additionally for confirmation in writing that all the transactions undertaken by the company have been properly reflected and recorded in the accounting records. • As part of our normal audit procedures, we may request you to provide written confirmation of certain oral representations which we have received from you during the course of the audit on matters having a material effect on the financial statements. • In connection with representations and the supply of information to us generally, we draw your attention to Sections 193(3), 196 and 197 of the Companies Act 1990, under which it is an offence for an officer of the company to mislead the auditors. • In order to assist us with the examination of your financial statements, we shall request early sight of all documents or statements, which are due to be issued with the financial statements. We are also entitled to attend all general meetings of the company and to receive notice of all such meetings. • We shall not be treated as having notice, for the purposes of our audit responsibilities, of information provided to members of our firm other than those engaged on the audit. • Once we have issued our report we will have no further direct responsibility in relation to the financial statements for that financial year. However, we expect that you will inform us of any material event occurring between the date of our report and that of the annual general meeting which may affect the financial statements. • As noted above, our report will be made solely to the company’s members, as a body, in accordance with Section 193 of the Companies Act, 1990. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed. DETECTION OF FRAUD, ERROR AND NON-COMPLIANCE WITH LAWS AND REGULATIONS • Responsibility for the companys compliance with company law and other laws and regulations rests with you, including the particular responsibility of each director (and the company secretary) to ensure that the company complies with the requirements of the OmniPro Education & Training 31 of 132
  34. 34. A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not serve as proof of completion alone. LTD CO AUDIT LETTER OF ENGAGEMENT EXAMPLE Companies Acts, 1963 to 2009. You are also responsible for safeguarding the assets of the company and for the prevention and detection of fraud or error. • However, we shall endeavour to plan our audit so that we have a reasonable expectation of detecting material misstatements in the financial statements or books of account (including any material misstatements resulting from fraud, error or non- compliance with law or regulations), although our examination should not be relied upon to disclose all such material misstatements or frauds, errors or instances of non- compliance as may exist. ACCOUNTING SERVICES/COMPANY SECRETARIAL (SPECIFY EXACTLY YOUR ROLE) • We have agreed that we shall, as your agents, prepare the financial statements based on accounting records maintained by yourselves on the basis that you will make full disclosure to us of all relevant information. • In providing the agreed services for you, our relationship will be that of professional person and client, save where we are instructed to negotiate tax liabilities with the Revenue Commissioners. • We have also agreed to provide assistance to the company secretary by preparing and lodging returns with the Registrar of Companies and to deal with any other routine secretarial matters that may arise. • To allow is to carry out these services all books, records and explanations requested by us must be submitted on a timely basis. To allow us to assist you in preparing returns for the Registrar of Companies it is necessary that the directors of the company have taken the steps to ensure that the audited (abridged if appropriate) accounts will be available to be annexed to the relevant returns • It is agreed that the directors of the company are primarily responsible to ensure that the company complies with the provisions of the Companies Acts 1963 to 2009 and will if necessary seek proper legal advice and record all decisions of the directors and members in minute books maintained for that purpose TAX COMPLIANCE SERVICES (SPECIFY EXACTLY YOUR ROLE) • We have agreed to prepare, in respect of each accounting period, a computation of the companys profits, adjusted in accordance with the provisions of the Taxes Acts. Subject to your approval, this will be submitted to the Inspector of Taxes with the companys formal return. We shall advise you each year before the due date of the amount of Corporation Tax payable. • You will be responsible, unless otherwise agreed, for all other returns, including returns relating to employee taxes under PAYE/PRSI and returns of employee expenses and benefits and VAT returns. • We shall also be pleased to advise you on other matters relating to taxation, such as the implications of particular business transactions and on other taxation matters, which you refer to us, such as value added tax, etc. OmniPro Education & Training 32 of 132
  35. 35. A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not serve as proof of completion alone. LTD CO AUDIT LETTER OF ENGAGEMENT EXAMPLE ADDITIONAL REPORTING RESPONSIBILITY UNDER LEGISLATION COMPANY LAW • The Company Law Enforcement Act, 2001, as amended the Companies Act, 1990, requires us to notify the Director of Corporate Enforcement ("the Director") forthwith where, in the course of, and by virtue of, our audit, we form the opinion that there are reasonable grounds for believing that the company, or an officer or agent of it, has committed a reportable indictable offence under the Companies Acts and to provide the Director with details of the grounds on which we formed that opinion. • The Companies Act, 1990, also requires us, as auditors, to notify the company if we form the opinion that the company is failing or has failed to keep proper books of account and, in the event that the directors do not take steps to rectify the situation within seven days, to notify the Registrar of Companies who is obliged to then notify the Director of Corporate Enforcement. • Our professional or legal duties to you are not contravened by reason of our compliance with either of the above obligations and no liability to the company, its shareholders, creditors or other interested parties shall attach to us by reason of such compliance. CRIMINAL LAW • The Criminal Justice (Theft and Fraud Offences) Act, 2001 (the “2001 Act”) requires us to report to the Garda Siochána where the accounts of the company indicate that an offence specified by the 2001 Act may have been committed by the company, or in relation to the affairs of the Company by its directors, secretary, managers or employees. The term accounts in this context may include any information, or any declaration, return, account or other document which we know will be, or is likely to be, used for the purpose of keeping or auditing the accounts of the company. The offences specified by the 2001 Act include theft, unlawful use of a computer, false accounting, forgery and counterfeiting. We are required to make such a report notwithstanding any professional obligation of privilege or confidentiality and such a report made in good faith shall not be treated as a breach of any restriction imposed by statute or otherwise and will not involve us in liability of any kind. • We are required to notify the Director of Corporate Enforcement directly and report to the Garda Siochána directly in the circumstances set out above and may do so without the knowledge and consent of the directors. • We have responsibilities under the Criminal Justice (Terrorism Offences) Act 2005, to report suspicions of the financing of terrorism. We are also obliged to adopt measures to prevent and detect the commission of an offence of financing terrorism and are obliged to train employees for the purpose of enabling them to identify transactions which may relate to the commission of an offence of financing terrorism. ANTI- MONEY LAUNDERING • The Criminal Justice (Money Laundering and Terrorist Financing) Act 2010 (Section 25) designates accountants, auditors and tax advisors for the purposes of the anti- money laundering provisions. The provisions of this Act require us to implement OmniPro Education & Training 33 of 132
  36. 36. A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not serve as proof of completion alone. LTD CO AUDIT LETTER OF ENGAGEMENT EXAMPLE certain procedures to establish client identity and impose reporting obligations in respect of suspicions regarding offences under the money laundering legislation. • Accountants, auditors and tax advisors are required to, amongst other things, carry out Customer Due Diligence under Section 33 to: o Verify the identity of new clients, including that of any beneficial owners who are connected with the client or the service they provide; o Establish and retain records of identification for at least five years from the date of last doing business with the client; o Retain original documentation relating to transactions for a period of at least five years following the execution of the transaction; o Establish measures to prevent and detect money laundering; o Report suspicions of money laundering to the Garda Siochana and the Revenue Commissioners; o Establish procedures to ensure all transactions connected with certain designated states and territorial units are reported; o Ensure adequate control over client monies. ADDITIONAL LEGAL RESPONSIBILITIES REGARDING TAXATION • We must report material relevant offences, as defined in Section 1079 of the Taxes Consolidation Act 1997, to the directors of the company in writing, requesting them to rectify the matter or notify an appropriate officer of the Revenue Commissioners of the offence within 6 months. In the event that our request is not complied with, we must cease to act as auditor to the company or to assist the company in any taxation matter. We must also send a copy of our notice of resignation to an appropriate officer of the Revenue Commissioners within 14 days. • The responsibility for detection of error or non-compliance with law or regulations in relation to taxes and in relation to information in respect of which you have collection, filing and / or payment obligations rests with you. Unless otherwise expressly agreed between us as a separate engagement, we shall not have any obligations for the preparation, accuracy or filing of returns or the discharge of liability for any taxes or duties, including corporation tax, VAT, PAYE / PRSI, DIRT, subcontractor’s tax, stamp duty, customs or excise duties or for the preparation and filing of third party information returns (e.g. Forms 46G). We will of course be happy to provide, on terms to be agreed between us, suggestions and advice on how best to satisfy your obligations under these particular headings. REPORTING TO THIRD PARTIES • There may be situations for example in relation to loan agreements, where a third party seeks to require us, in our capacity as auditors, to report to them. Any contractual arrangements between you and a third party which seek to impose such requirements upon us will not, as a matter of law, be binding on us. However, depending on the circumstances we may agree to provide reports to third parties, but not in our capacity as auditors. Any such possible requirements must be discussed with us at the earliest opportunity and well before the loan agreement or other arrangement is finalised. In this regard, however, it is our policy not to extend our duty of care in respect of our audit report in the financial statements. OmniPro Education & Training 34 of 132
  37. 37. A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not serve as proof of completion alone. LTD CO AUDIT LETTER OF ENGAGEMENT EXAMPLE • As noted above, our opinion will be prepared for and only for the companys members in accordance with Section 193 of the Companies Act, 1990 and for no other purpose. In those circumstances, we will not, in giving our opinion, accept or assume responsibility (legal or otherwise) or accept liability for or in connection with any other purpose for which our report or opinion may be used, or to any other person to whom our report is shown or into whose hands it may come, and no other persons shall be entitled to rely on our opinion save where they have obtained our prior written consent that they may do so. • In accordance with the Auditing Practice Board’s International Standard on Quality Control 1 and our firms internal control procedures our audit files and working papers may be subject to an external review by our Institute. ELECTRONIC COMMUNICATIONS • In the course of the engagement we may communicate with you electronically. However, as you are aware the electronic transmission of information cannot be guaranteed to be secure or error free and such information could be intercepted, corrupted or lost, destroyed, arrive late or incomplete or otherwise be adversely affected or unsafe to use. Accordingly whilst we will use commercially reasonable procedures to check for the then most commonly know viruses before sending information electronically and notwithstanding any collateral contract, warranty or representation, neither we nor our partners, employees, agents or servants shall have any liability to you on any basis, whether in contract, tort (including negligence) or otherwise, in respect of any error or omission arising from or in connection with the electronic communication of information to you and your reliance on such information and including (but not limited to) the acts or omissions of our service providers. Such exclusion of liability shall not apply to us in the event of such acts, omissions or misrepresentations which are in any case criminal, dishonest or fraudulent on the part of our partners, employees, agents or servants. • If the communication relates to a matter of significance on which you wish to rely and you are concerned about the possible effects of electronic transmission you should request a hard copy of such transmission from us. If you wish us to password protect all or certain documents transmitted you should discuss this with us and we will make appropriate arrangements. FEES • Our fees are computed on the basis of time spent on your affairs by the partners and our staff and on the levels of skill and responsibility involved. Unless otherwise agreed, fees will be charged separately for each main class of work at appropriate intervals during the course of the year and will be due on presentation. It is our usual practice to provide estimates of our fees in advance of the work commencing. • Any costs in terms of time spent by Compliant Accountant & Co. partners and staff, incurred in complying with the requirements set out in the section entitle Additional Reporting Responsibility Under Legislation will be payable by the company. CONFIDENTIAL INFORMATION • We shall not disclose, to third parties, confidential information acquired in the course of our professional work without your consent unless there is a legal right or duty to OmniPro Education & Training 35 of 132

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