Acca aaa s21 Notes

3. Audit procedures to assess compliance
๏
Obtain an understanding of the client’s regulatory environment and how the client complies.
๏
Obtain sufficient appropriate audit evidence where the laws and regulations directly affect the 
financial statements.
๏
In respect of other laws:
‣
enquire of management whether the entity is in compliance
‣
inspect correspondence with relevant licensing authorities.
๏
Remain alert during the audit that other audit procedures might detect non-compliance.
๏
Ask for written representations from management declaring that all known incidents of non-
compliance whose effects should be considered in the preparation of the financial statements 
have been disclosed to the auditor.
๏
In the absence of identified or suspected non-compliance the auditor is not required to carry 
out audit procedures to confirm compliance other than those listed above.
4. Non-compliance is identified or suspected
The auditor must:
๏
Understand the nature of the non-compliance and evaluate the possible effects on the financial 
statements.
๏
Discuss the matter with management and TCWG if appropriate. 
๏
If sufficient information about the suspected non-compliance cannot be obtained, consider the 
effect of this lack of sufficient appropriate evidence on the audit opinion.
๏
Consider the effects of non-compliance on other aspects of the audit such as risk assessment 
and the reliability of written representations. [In other words, the directors may have shown that 
they consider compliance to be voluntary. If they act like this in one area how many other 
incidents of non-compliance might exist?]
September 2021 to June 2022 exams
Watch free ACCA AAA lectures 
36

---

Only on 
OpenTuition
you can find: Free ACCA notes 
•
Free ACCA lectures 
•
Free ACCA tests 
•
Free ACCA tutor support 
•
The largest ACCA community