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

Audit staff at Ridgeway Pharma plc ask which audit procedure ISA 250 (Revised) requires in all audits to help identify non-compliance with laws that may affect the financial statements. Which of the following is such a required procedure?

The required procedure is to obtain written representations from management that they have disclosed to the auditor all known actual or possible non-compliance with laws and regulations whose effects should be considered in preparing the financial statements. The other options go beyond what the standard mandates in every audit.

  1. AObtaining a written legal opinion on all contracts signed in the year
  2. BRequesting written representations that management has disclosed all known actual or suspected non-complianceCorrect
  3. CAttending inspections by regulators of the entity's premises
  4. DRe-performing the entity's regulatory compliance checks for the full year

Explanation

ISA 250 (Revised) requires the auditor to request written representations that management has disclosed all known or suspected non-compliance whose effects should be considered when preparing financial statements. Legal opinions on all contracts, attending inspections, and re-performing all compliance checks are not required. Legal advice may be sought if non-compliance is suspected, but not as a blanket procedure.

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