Here we will look specifically at the auditors’
duties in considering whether or not the company has complied with the
provisions of the combined code.
The requirement of the code which is relevant to
the auditors can be summarized as:
The auditors duties are covered by ISA 720
(revised) section A-other information in documents contains audited financial
statements; section-the auditors’ statutory reporting responsibility in
relation to directors’ reports.
(revised) section A-other information in documents contains audited financial
statements; section-the auditors’ statutory reporting responsibility in
relation to directors’ reports.
These
can be summarized as follows.
can be summarized as follows.
The
‘read only’ requirement for other information
‘read only’ requirement for other information
Any apparent inconsistencies or any apparent
misstatement in the corporate governance statements should be resolved and the
directors should amend the inconsistency.
misstatement in the corporate governance statements should be resolved and the
directors should amend the inconsistency.
If this
does not happen then the auditors should:
does not happen then the auditors should:
·
If the
financial statements are incorrect, qualify their report.
If the
financial statements are incorrect, qualify their report.
·
If the
financial statements are correct and the other information is incorrect or
inadequate, make a statement in the auditors’ report. This statement is however
not a qualification.
If the
financial statements are correct and the other information is incorrect or
inadequate, make a statement in the auditors’ report. This statement is however
not a qualification.
Reviewing
the statement of compliance with the provisions of the code
the statement of compliance with the provisions of the code
The
review should take the following form:
review should take the following form:
The
auditors should obtain sufficient appropriate evidence to support the
compliance statement made by the company.
auditors should obtain sufficient appropriate evidence to support the
compliance statement made by the company.
Appropriate evidence can be gained
by the following procedures:
by the following procedures:
·
Reviewing
the minutes of the meetings of the board and of relevant board committees
(audit, nomination, remuneration, risk management etc.)
Reviewing
the minutes of the meetings of the board and of relevant board committees
(audit, nomination, remuneration, risk management etc.)
·
Reviewing
relevant supporting documents prepared for the board or board committees.
Reviewing
relevant supporting documents prepared for the board or board committees.
·
Making
enquiries of the directors and the company secretary.
Making
enquiries of the directors and the company secretary.
·
Attending
meetings of the audit committee (or other committee) when the annual report and
accounts and statements of compliance are considered and approved for
submission to the board.
Attending
meetings of the audit committee (or other committee) when the annual report and
accounts and statements of compliance are considered and approved for
submission to the board.
·
The
auditors may ask for a letter of representation of any written or oral representations
made in the course of the review
The
auditors may ask for a letter of representation of any written or oral representations
made in the course of the review
If the auditors are not satisfied with the
directors’ compliance statement they will include an explanatory comment in their
auditors’ report
directors’ compliance statement they will include an explanatory comment in their
auditors’ report
