7. NATIONAL LAW
WHICH COMPANIES ARE REQUIRED TO
HAVE AN AUDIT
WHO CAN AND CANNOT CARRY OUT AN
AUDIT
AUDITOR APPOINTMENT, RESIGNATION
AND REMOVAL
THE RIGHTS AND DUTIES OF AND
AUDITOR
8. WHO NEEDS AN AUDIT AND WHY
In most countries companies are required
by law to have an audit
Small or owner managed companies are
often exempt
Normally exemptions often do not apply
to companies in certain regulated sectors
e.g. financial services companies or
companies listed on a stock exchange
9. ACTING AS AN AUDITOR
MAY ACT AS AN AUDITOR
Member of Recognised Supervisory Body, e.g ACCA
and allowed by the rules of that body to be an
auditor or
Someone directly authorized by the state
MAY NOT ACT AS AND AUDITOR
Excluded by law
Excluded by the Code of Ethics
10. APPOINTMENT OF AUDITOR
Shareholder(Members)- Usually
through Annual General Meeting
Directors-First Auditor or to Fill Casual
Vacancy
Secretary of State-If no auditors are
appointed by the members or directors
11. REMOVAL OF AUDITOR
REMOVAL
Auditor has sufficiently secure tenure of office, to maintain
independence of management
Doubts about their continuing abilities to carry out their duties
effectively
SAFEGUARDS
Auditor can circulate representations stating why they should not
be removed
Statement of circumstances must be sent to the company and the
regulatory authority to set out issues surrounding the cessation of
office
Specified notice period
12. RESIGNATION OF AUDITOR
Auditor and Management find difficult to
work together
Issues written notice of the resignation and
a statement of circumstances to the
members and the regulatory authority
If resigns or removed from office before
end of their term of office, they must
notify the recognized supervisory body
13. RIGHTS AND DUTIES OF AUDITOR
Right to
Access
Books
Right to
Receive
Necessary
Information
Receive
Notice of
and Attend
General
Meeting
Heard at
General
Meetings
Receive
Written
Resolutions
of Company
ON APPOINTMENT
14. RIGHTS AND DUTIES OF AUDITOR
Request General meeting of the
company to explain the circumstances
of the resignation
Require the company to Circulate the
notice of circumstances relating to
the resignation
ON RESIGNATION
15. INTERNATIONAL REGULATION
IFAC(International
Federation of Accountants
IFAC Code of
Ethics
IAASB(Intl’ Auditing
and Assurance
Standards Board)
International Standards on
Auditing(ISAs)
International Standard on
Quality Control(ISQC)
16. MAIN FEATURES OF ISAs
Ensures Consistency in Audit and Required Standard of
Quality
ISAs are not legal requirements. Local law will be
preferred over ISAs.
Usually Relevant to Audit of Financial Statements but also
can be applied to Audit of Other Historical Financial
Information
ISA must be applied in all but exceptional cases
Contain Basic Principles and Requirements followed by
Application and other Explanatory Material to Aid the
Auditor on How to Follow the Requirements
18. RELATIONSHIP-NATIONAL AND INTL’
STANDARDS AND REGULATION
IFAC Has Not Legal Standing In Individual Countries
Countries Need To Have Their Own Arrangements In Place
For Regulating The Audit Profession And Implementing The
Audit Standards
National Standard Setters
May Develop Their Own Auditing Standards And Ethical
Standards
May Adopt And Implement ISAs, Possibly After Modifying
Them To Suit National Needs
P.S. Local Regulations will prevail in event of Conflict
19. ROLE OF PROFESSIONAL BODIES
Successful Completion of EXAMS for obtaining membership
Relevant Practical EXPERIENCE for obtaining membership
Completion of ETHICAL Assessment for obtaining membership
Demonstration of CONTINUING PROFESSIONAL
DEVELOPMENT(CPD) requirements for maintaining
membership
DISCIPLINARY ACTION for Non compliance with Rules of
Professional body
For Serious offences, matter can be referred to the National
Regulator generally cases involving significant public interest
issues