Deck 4: Audit Regulation

Question 1

Which of the following is not a part of the Financial Reporting Council?

A) Codes and Standards Committee
B) Audit & Assurance Council
C) Corporate Reporting Council
D) Auditing Practices Board

Answer 1

Auditing Practices Board

Question 2

? The role of a Recognised Supervisory Body in the UK includes investigating possible breaches of audit regulations

Answer 2

True

Question 3

Auditors are appointed by the directors who agree their remuneration

Answer 3

False

Question 4

Recognised Qualifying Bodies determine eligibility for a course of study

Question 5

Unless the company does not have to hold an Annual General Meeting (AGM) auditors are appointed until the end of the financial year

Question 6

An audit firm taking over an audit from a predecessor firm should write to them for clarification on particular audit matters. ? Which of the following should not be included in such a letter? ?

A) The basis of the fee charged
B) Doubts about the honesty and trustworthiness of the directors
C) Whether or not the client tried to withhold information
D) Confirmation that there is no reason why they might not accept the appointment

Question 7

Which of the following is not an RSB?

A) ICAEW
B) CIPFA
C) ACCA
D) ICAS

Question 8

Platypus Ltd is a family company with a turnover this year of £12 million, up from last year's figure of £9.8 million. It is wholly owned and run by two brothers who are the directors and it employs 20 people. The company's net assets total £6 m consisting mostly of machinery, land, agricultural buildings in which the equipment is stored and a small office and parts store. The directors are not sure about their status as regards an audit. Advice they have been given ranges from options a to d. Which of the statements is true?

A) As a small family company with no outside shareholders they do not need an audit, but they could choose to have one.
B) It is a good idea to have an audit in any case as it adds credibility to the figures when they are being looked at by the bank and the taxman.
C) They must have an audit by law.
D) As they are both involved in managing the business and they own all of it, an audit is pointless and will not benefit anyone.

Question 9

? The work of the auditing profession in the UK is governed primarily by the Companies Act 2006

Question 10

The Financial Reporting Council has the power to discipline auditors who perform their work poorly

Question 11

Auditors do not have to have absolute assurance that the figures they audit are correct

Question 12

Only accountants who are qualified with the Institute of Chartered Accountants in England & Wales or the Association of Chartered Certified Accountants can become Registered Auditors

Question 13

Auditors have several rights to enable them to carry out their duties. Which of the following is not an auditor's right?

A) Right to all explanations and information they consider necessary
B) Right to access all books and records of the company
C) Right to access company information held by third parties
D) Right to attend any meeting of the company

Question 14

The Conduct Committee can investigate a situation where there is the possibility of an allegation affecting public confidence in the auditing profession.

Question 15

The relevant RSB approves individuals to be Registered Auditors.

Question 16

The maximum number of years an audit firm can retain the audit of a public interest entity (PIE) is seven.

Question 17

Auditors may charge contingency fees for non audit work.

Question 18

Auditors may be removed by an ordinary resolution of the shareholders at a general meeting. Which of these rights do the auditors not have when a resolution for their removal is presented to the meeting?

A) The right to receive copies of any resolution for their removal
B) The right to make written representations to the shareholders who have received notice of the meeting and have them circulated to the shareholders by the company
C) The right to table an alternative resolution at the meeting that they retain their office as auditor
D) The right to speak at the meeting and make representations concerning their removal

Question 19

The very first auditors of a company are appointed by the directors.

Question 20

Any accountant who is a member of an RSB can sign an audit report.

Question 21

Before accepting appointment the prospective auditors should contact any outgoing auditors as a matter of professional courtesy and to find out if there is anything they should know.

Question 22

The auditors communicate with the shareholders by means of their Auditor's Report.