AUDIT CLASS TEST

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TUESDAY 9TH DECEMBER 10 AM
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AUDITING UNIT 1 Auditing is there a need? Assurance engagements and Internal Audit CHAP 1, 19
UNIT 2 Auditors’ liability Corporate Governance, auditors’ duties, error and fraud, case law on audit liability, Limiting auditors’ liability. CHAP 2, 20, 29
UNIT 3 Audit regulation Company law, Auditing Standards. Professional ethics, Ethical standards. Chap 4 - not covered in class – students to read CHAP 3, 5, 6,8
UNIT 4 Audit evidence Audit objectives. Business Risk and Audit Risk model. Statistical sampling. Materiality. Importance of working papers. Chap 7 - not covered in class – students to read CHAP10, 11,12,14, 18
AUDITING - TUTORIAL 1 Research What Are The Audit Requirements Of Small Companies? The CA 2006 section 477: The CA 2006 section 477: To qualify as small a company in its first financial year needs to meet at least two out of three of the following conditions: • turnover not more than £6.5m • balance sheet total not more than £3.26m • number of employees not more than 50.
To be exempted from audit in respect a financial year beginning on or after 6 April 2008 a company needs to meet all of the following conditions: • that the company qualifies as a small in relation to that year • that its turnover in that year is not more than £6.5m • that its balance sheet total for that year is not more than £3.26m
A company will therefore need to qualify as a small company in accordance to the criteria stated in the paragraph above before it can test its turnover and balance sheet conditions to obtain audit exemption. It is important to state that if the company fails even only one of the conditions it will not be able to be exempted from audit New Proposals According to the Financial Times:
 “At present, European Union rules mean that to classify as “small” for accounting purposes, a company must comply with two out of three criteria: having no more than 50 employees, a balance sheet of no more than £3.26m and turnover of no more than £6.5m  However, to obtain an audit exemption in the UK, small companies must fulfil both the balance sheet and turnover criteria. Under the new proposals, UK SMEs would be eligible for audit exemption by meeting any two of the three criteria, saving an estimated £206m a year. An average audit for a small company costs £9,500.
 The change to audit exemptions and the accounting framework would apply for accounting years ending on or after October 1 2012. financial times.... read it
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