lecture 5

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Published on 7 Jan 2011
School
UTM
Department
Management
Course
MGT321H5
Professor
CLASS FIVE
Legal Liability of Auditors
ExtractBusiness Corporations Act
Annual Financial Statements
A meeting must be held annually to present to the shareholders
i) Comparative financial statements (this periods and the last)
ii)The report of the auditor, if any
iii)Any information regarding the financial position of the corporation
Approval of financial statements
The directors of a corporation must approve the financial statements and of all its contents
Qualification of auditor
An auditor must be independent from the corporation in order to perform an audit
Independence must be a fact
Dispensing with auditor
The shareholders of a non-distributing corporation may decide not to have an auditor
Examination
The auditor of a company shall me the examinations necessary to obtain s&a audit evidence to
provide an opinion about the f/ss
Reliance on another auditor
An auditor of a corporation may rely on the report of another auditor for parts included in the
f/ss
Audit committee
A corporation must have an audit committee composed of at least 3 directors, where the majority
must not be executives, employees or associated with the corporation
Duty of committee
An audit committee must review the f/ss before they can be approved
Quality control for an audit of f/ss
To ensure quality control on a specific client engagement
-Engagement quality control review:
i) Evaluation of the firms independence
ii) Consultation, audit documentation must reflect the work of the engagement,
-Monitoring process:
i) Results from latest monitoring process
ii)Any deficiencies detected? Additional procedures needed?
Leadership responsibilities for quality on an audit
Relevant ethical requirements
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Document Summary

A meeting must be held annually to present to the shareholders: comparative financial statements (this periods and the last) ii)the report of the auditor, if any iii)any information regarding the financial position of the corporation. The directors of a corporation must approve the financial statements and of all its contents. An auditor must be independent from the corporation in order to perform an audit. The shareholders of a non-distributing corporation may decide not to have an auditor. The auditor of a company shall me the examinations necessary to obtain s&a audit evidence to provide an opinion about the f/s"s. An auditor of a corporation may rely on the report of another auditor for parts included in the f/s"s. A corporation must have an audit committee composed of at least 3 directors, where the majority must not be executives, employees or associated with the corporation. An audit committee must review the f/s"s before they can be approved.