AUDIT REGULATIONS

The overall governance of audit regulated by IFAC

ISEB IAASB
International standard ethics board international audit and assurance
Standard board

RESPONSIBLE FOR SETTING ISA ISQC

STADARD SETTING PROCESS

1. They need to identify for new standard or amend exist one.

2. Task force is appoint to develop a draft standards
3. Draft is issued to the public for comment (exposure draft)
4. Comments are received and incorporated if the comments are received are
the many the issued are their exposure.
5. Standard is approved by at least 2/3 of the members of IAASB .

THE OF REGULATIONS

1. To enhance audit procedures

2. Enhance audit quality
 3. They help accountant adhere to restrict ethical codes of conduct to enhance
independence of the auditor.

THE ROLE OF THE REGULATORY BODIES

1. Offer training and continues professional developments

2. Enforce implementation of auditing standards
3. Have disciplinary powers to force the quality of the work.
4. Help in setting regulations.

NATIONAL STANDARD SETTERS CAN DECIDE

I. Set on their standards

II. They adopt international standards
III. They adopt and modify the international standards to suit local
requirements.

If national standards are with conflict international standards national standards

always prevail.

WHO NEED AN AUDIT

Some companies are exempted from audit especially companies called small
companies.

WHAT IS SMALL COMPANY?

Small company has the following characteristics

 1. Concentration of ownership and management is in small number of
individuals.
2. It has one or more of the following
a. Straight forward and uncomplicated transactions.
b. Simple record keeping
c. Few internal controls
d. Few products
e. Few staff having many responsibilities

REASONS FOR EXEMPTING THE SMALL COMPANIES

1. Those receiving the audit report are those running the company.
2. The impact of misstatement in the accounts of small companies is unlikely
to be material to wider economy.
3. The audit fees and destructions resulting from audit are too great as cost to
small companies.
4. The advice of value which accountants can add to small companies is more
likely to concern other services such as accounting and tax rather than audit
which may cause a conflict of interest

WHO MAY ACT AS AUDITOR

People who may act as auditor a member of recognized supervisory body(eg

ACCA)allowed by the rules of that body to be auditor or someone appointed by the
Government
ONE MAY NOT ACT AS AUDITOR IF

1. Directors
2. Employee of the company
3. Business partner
4. Those excluded by code of ethics.

WHO APPOINTED THE AUDITOR

a. The shareholders appoint the auditors at AGM(Annual General meeting)
b. Directors can appoint the first auditor to fill casual vacancy.
c. Secretary of state in case they fail

FOR HOLDING AUDIT APPOINT

From one AGM to next AGM. For private company who don’t who don’t call
AGMs. The audit appoints is automatic unless the shareholder objects.

DUTIES OF AUDITOR

In accordance IAS200 the fundamental objectives of the auditor are

1. Obtaining reasonable assurance about whether the financial statements as

whole are free material misstatements whether due to fraud and error.
2. Express opinion on whether the financial statements are prepared in all
material respects in accordance an applicable reporting frame work.
3. To report on the financial statements and communicate as required by IAS in
accordance with the auditor’s findings.
4. They need to agree the accounts of the company with it records and returns.
5. To ensure consistence of other information with the director’s report