(4th edition, 2010)
As outlined on pages 32–3 of the textbook, the auditing standards are applicable to all audits and have legislative backing as a result of the CLERP 9 changes to auditing requirements contained in the Corporations Act 2001. Failure to observe these standards may expose a member to investigation and disciplinary action from the Australian Securities and Investments Commission (ASIC).
For audits undertaken under the Corporations Act 2001, the auditing standards have legal authority by virtue of the amendments contained in CLERP 9. For other audits there is a mandatory obligation for members of the accounting bodies in Australia to comply with the ASAs, which is found in APES 410 ‘Conformity with Auditing and Assurance Standards’, issued by the Australian Professional and Ethical Standards Board (APESB). APES 410 states that the basic principles and essential procedures in an ASA are mandatory and are to be complied with in the planning, conduct and reporting of an audit engagement. APES 410 indicates that the standards are to be applied to all financial report audits and to all audits of other financial and non-financial information, adapted as necessary.
Rights of an auditor under the Corporations Act 2001:
|S 310 |Auditor has right of access to records and information at all reasonable times. |
|S 312 |Officer must allow auditor access to records and provide information and explanations. |
|S 331 |Auditor is entitled to reasonable fees and expenses. |
Duties of an auditor under the Corporations Act 2001:
|S 307A |Audit must be conducted in accordance with auditing standards. |
|S 307B |Audit working papers must be retained for 7 years. |
|S 307C |An auditor must make a written independence declaration. |
|S 308 |Auditor must give an opinion as to whether the financial report is properly drawn up: |
| |so as to give true and fair view; |
| |in accordance with the Corporations Act 2001; |
| |in compliance with accounting standards. |
|S 311 |Auditors have a duty to inform the ASIC as soon as possible if they: |
| |have reasonable grounds to suspect that there has been a contravention of the Corporations Act 2001; |
| |and |
| |believe that the matter has not been or will not be adequately dealt with by comment in the auditor’s|
| |report on the financial report or by bringing the matter to the notice of the directors of the |
| |company. |
This question can be answered by referring to the five elements of an assurance engagement.
(i) NO. Assisting management to achieve goals and objectives is NOT an assurance service. There is no three party relationship, nor is it clear that there is suitable criteria. Such assistance would be constructed as a consulting activity.
(ii) NO. Assisting in identifying legislative obligations is NOT an assurance service. There is no three-party relationship, nor is it clear that there are suitable…