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Dear sir
I am bit confuse about this question the question isIn accordance with ISA 250 Consideration of laws and regulations in audit of financial statements what are the responsibilities of the external auditor?
A. To obtain sufficient appropriate evidence regarding compliance with laws and regulation that have both a direct and indirect effect on financial statement.
B. To obtain sufficient appropriate evidence regarding compliance with laws and regulation that have a direct effect on financial statement only.
C. To obtain sufficient appropriate evidence regarding compliance with laws and regulation that indirect effect on financial statement only.
D. To prevent and detect all non compliance with laws and regulations which Affect the businessMy answer is A
BUT answer is D
Why am I wrong could you please explain me ?Thank you
ISA 250 says:
The auditor shall obtain sufficient appropriate audit evidence regarding
compliance with the provisions of those laws and regulations generally
recognized to have a direct effect on the determination of material amounts
and disclosures in the financial statements.So I think D is wrong and A is right.
Dear Mr Gromit,
As I remember in the lecture, auditor has to obtain evidences of compliance to direct effect laws & regulation and of non-compliance to indirect ones. So I suppose that B is correct answer? A indicates that evidences of compliance is needed to both direct & indirect!
I’ve looked at ISA 250 again and it says:
The objectives of the auditor is to
(1) To obtain sufficient appropriate audit evidence that the financial statements are not materially misstated due to non-compliance with laws and regulations that have a direct effect on the determination of material amounts and disclosures in the financial statements;
(b) To perform specified procedures to help identify instances of non-compliance with other laws and regulations that may have a material effect on the financial statements.
I suppose therefore B is better, but in a way it is complete as it does not state all the obkectives of the external auditor.
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