ACCA AA Syllabus A. Audit Framework And Regulation - Duties / Rights of the Auditor - Notes ^{5 / 8}

These are to form an Opinion on:

• Do the financial statements provide a true and fair view?

• Are they prepared in accordance with applicable accounting standards?

• And to prepare and issue a report

The auditor does this by ensuring:

1. Proper accounting records are kept

2. The FS reflect the underlying accounting records.

3. If the auditor has not visited a branch, that branch has made proper returns.

4. All necessary information and explanations have been received.

5. Information issued with the financial statements (FS) is consistent with the financial statements.

6. If any information required by law is not in the FS, it is in the auditors’ report.

An auditor’s responsibility is to

1. Evaluate the overall presentation of the FS and

2. Evaluate the reasonableness of accounting estimates made by management.

Rights of the external auditor

They have basically 5 rights - remember these for the exam my friend..

1. The right of access to all accounting books and records at all times.

2. The right to all information and explanations (from management) necessary for the proper conduct of the audit.

3. The right to receive notice of all meetings of the shareholders (such as the annual general meeting) and to attend those meetings.

4. The right to speak at shareholders’ meetings on matters affecting the audit or the auditor. 

   This can be important when the auditors are in disagreement with the directors of the client entity and are unable to communicate with the shareholders effectively by any other method.

5. If the company uses written resolutions, the auditors should have a right to receive a copy of all such resolutions.