Accounting Q&A · Auditing · Topic 10
Practise company audit appointments, reporting obligations and local law. Try each answer before revealing it.
Worked example
A small company assumes an exemption applies. Check current local law, status, size and group membership. Document the rule and conclusion before setting reporting plans.
Core concepts
1. What should you know about statutory threshold?
A local size or status test that may determine audit obligations.
2. What should you know about appointment?
The formal designation of an eligible auditor under governing rules.
3. What should you know about eligibility?
Required qualifications and independence conditions for the role.
4. What should you know about engagement letter?
Records the agreed scope, responsibilities and expected reporting.
5. What should you know about audit exemption?
A legal provision relieving an entity of an audit requirement under stated conditions.
6. What should you know about governance?
Those charged with oversight of strategic direction and accountability.
7. What should you know about resignation?
Auditor withdrawal subject to local notice and other requirements.
8. What should you know about removal?
Termination of appointment through the applicable legal process.
9. What should you know about reporting deadline?
The applicable date by which an audit-related report or filing is due.
10. What should you know about regulatory reporting?
Communication to an authority when governing requirements provide for it.
Case 1
A small company assumes an exemption applies.
11. Which audit concept is central here?
Audit eligibility and exemption.
12. What is the main objective?
Determine whether a statutory audit is required.
13. What evidence or procedure would you use?
Check current local law, status, size and group membership.
14. What limitation should you consider?
Small size alone may be insufficient.
15. What should happen next?
Document the rule and conclusion before setting reporting plans.
Case 2
A board asks the auditor to sign before appointment formalities are complete.
16. Which audit concept is central here?
Appointment and engagement.
17. What is the main objective?
Confirm the engagement is validly accepted.
18. What evidence or procedure would you use?
Inspect resolutions and check legal and professional requirements.
19. What limitation should you consider?
An engagement letter does not necessarily cure an invalid appointment.
20. What should happen next?
Complete the required formalities before reporting.
Case 3
An auditor identifies suspected regulatory non-compliance.
21. Which audit concept is central here?
Reporting obligations.
22. What is the main objective?
Assess implications for the audit and communications.
23. What evidence or procedure would you use?
Consult applicable law, standards and ethical requirements.
24. What limitation should you consider?
External reporting duties vary by jurisdiction.
25. What should happen next?
Document the decision and communicate as required.
Professional standards reference. For statutory duties, confirm the rules in the relevant jurisdiction.