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

Kestrel Logistics' auditor, Dunmore & Co, is planning the audit. Which of the following procedures is required by ISA 250 (Revised) as part of obtaining a general understanding of the legal and regulatory framework?

The auditor must obtain a general understanding of the legal and regulatory framework that applies to the entity and its industry, and of how the entity is complying with it. The standard does not require legal opinions, transaction-level testing of all laws, or a lawyer on every team.

  1. AObtaining an understanding of the legal and regulatory framework applicable to the entity and industry, and how the entity complies with that frameworkCorrect
  2. BObtaining a legal opinion confirming that the entity complies with all relevant laws
  3. CTesting every transaction for compliance with all laws applicable to the industry
  4. DAppointing a lawyer to join the audit team in every engagement

Explanation

ISA 250 requires the auditor to obtain a general understanding of the legal and regulatory framework applicable to the entity and industry and how the entity complies with it. It does not require legal opinions, testing every transaction, or a lawyer on every engagement.

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