• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Free ACCA & CIMA online courses from OpenTuition

Free ACCA & CIMA online courses from OpenTuition

Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams

  • ACCA
  • CIMA
  • FIA
  • OBU
  • Books
  • Forums
  • Ask AI
  • Search
  • Register
  • Login
  • ACCA Forums
  • Ask ACCA Tutor
  • CIMA Forums
  • Ask CIMA Tutor
  • FIA
  • OBU
  • Buy/Sell Books
  • All Forums
  • Latest Topics

20% off ACCA & CIMA Books

OpenTuition recommends the new interactive BPP books for September 2025 exams.
Get your discount code >>

ISA 250 Consideration of Laws and Regulations in an Audit

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AA Exams › ISA 250 Consideration of Laws and Regulations in an Audit

  • This topic has 4 replies, 2 voices, and was last updated 2 years ago by Kim Smith.
Viewing 5 posts - 1 through 5 (of 5 total)
  • Author
    Posts
  • August 29, 2022 at 9:17 am #664578
    Mufadhal
    Participant
    • Topics: 7
    • Replies: 6
    • ☆

    In the scenario, “a managing director is suing the company for unjust dismissal”

    and there is possibility that the company may not have complied with employment regulations.

    The questions:

    Which of following responsibility is CORRECT regarding the responsibility of auditors in relations to compliance with employment regulations?

    A. To obtain sufficient appropriate evidence regarding compliance, as they have a direct effect on the financial statement.

    B. To perform specific audit procedures to identify possible non-compliance

    The answer to this question says it is B because it has direct effect, but I thought it is quite the opposite it is correct when there is indirect effect and there for A is the answer.

    Please help me with this confusion.

    August 29, 2022 at 10:15 am #664580
    Kim Smith
    Keymaster
    • Topics: 133
    • Replies: 8304
    • ☆☆☆☆☆

    You don’t say where this question comes from.

    On page 114 of our notes:

    The auditor:
    … Is responsible for obtaining sufficient appropriate audit evidence regarding compliance with
    ‘direct’ laws and regulations;

    I would say this is a responsibility “in general”.

    However, you have a scenario here which suggests a risk of non-compliance with employment legislation – so the auditor would need to respond to that risk – with substantive procedures.

    That’s all I can suggest – what does the answer justification say?

    August 29, 2022 at 12:15 pm #664586
    Mufadhal
    Participant
    • Topics: 7
    • Replies: 6
    • ☆

    The question comes from BPP practice & Revision Kit 2022-2023, Question 128.

    August 29, 2022 at 12:31 pm #664587
    Kim Smith
    Keymaster
    • Topics: 133
    • Replies: 8304
    • ☆☆☆☆☆

    It’s possible that the correct answer has been mislabeled and it should be A rather than B – I can look in the book tomorrow and see if there’s anything else to confirm this as a typo – but that is really for BPP to confirm.

    August 30, 2022 at 10:46 am #664674
    Kim Smith
    Keymaster
    • Topics: 133
    • Replies: 8304
    • ☆☆☆☆☆

    I think the typo is that “direct” should be “indirect”:

    “For those which have aN INdirect effect on the financial statements ….”

    Employment regulations generally would be indirect.

    “Direct” means directly affecting the financial statements and include:

    o The form and content of financial statements; E.G. Companies Act 2006 provisions
    o Industry-specific financial reporting issues; E.G. for financial institutions
    o Accounting for transactions under government contracts; (you’re not expected to have any idea what this means but as well as following GAAP, government contracts are required to apply specific cost accounting principles)
    o The accrual or recognition of expenses for income tax or pension costs. E.G. Tax legislation

  • Author
    Posts
Viewing 5 posts - 1 through 5 (of 5 total)
  • You must be logged in to reply to this topic.
Log In

Primary Sidebar

Donate
If you have benefited from our materials, please donate

ACCA News:

ACCA My Exam Performance for non-variant

Applied Skills exams is available NOW

ACCA Options:  “Read the Mind of the Marker” articles

Subscribe to ACCA’s Student Accountant Direct

ACCA CBE 2025 Exams

How was your exam, and what was the exam result?

BT CBE exam was.. | MA CBE exam was..
FA CBE exam was.. | LW CBE exam was..

Donate

If you have benefited from OpenTuition please donate.

PQ Magazine

Latest Comments

  • ahmadhoney on ACCA Advanced Audit and Assurance (AAA) The Audit Report 3: Types of Audit Report
  • Bimasha@123 on Discounted Cash Flow Techniques – ACCA Advanced Performance Management (APM)
  • Ken Garrett on Discounted Cash Flow Techniques – ACCA Advanced Performance Management (APM)
  • Bimasha@123 on Discounted Cash Flow Techniques – ACCA Advanced Performance Management (APM)
  • John Moffat on AA Chapter 7 Questions

Copyright © 2025 · Support · Contact · Advertising · OpenLicense · About · Sitemap · Comments · Log in