Skip to content

ACCA Strategic Professional · Advanced Audit and Assurance (International) · Laws and regulations

At the planning stage of the audit of Calloway Retail, the engagement partner is deciding what audit work ISA 250 (Revised) requires on laws and regulations in general, outside those with a direct effect on the financial statements. Which procedures are required?

The auditor must inquire of management and those charged with governance about compliance and inspect correspondence with licensing and regulatory authorities. ISA 250 does not require testing every applicable law, and a management representation alone is not enough. Further work is needed only if non-compliance is identified or suspected.

  1. ADetailed testing of compliance with every law applicable to the retail sector
  2. BInquiring of management and those charged with governance about compliance, and inspecting correspondence with licensing and regulatory authoritiesCorrect
  3. CRelying solely on a management representation that the company has complied with all laws
  4. DConfirming compliance directly with the regulator for every applicable law

Explanation

For laws without a direct effect on the financial statements, ISA 250 requires limited procedures: inquiries of management and those charged with governance about compliance, and inspecting correspondence with relevant regulators. Further procedures arise only if non-compliance is identified or suspected. Full testing of all laws is not required, and a written representation alone is insufficient evidence.

Did you get it right without looking?

One question tells you little. A timed set on Laws and regulations shows your real accuracy, how long you take and where you lose marks.

Practise Laws and regulationsFree diagnostic mock

More Laws and regulations questions