Chapter 2: Responsibilities

Question 1

What are the responsibilities of a director? (6)

Answer 1

1. Safeguard assets
2. Maintain the books and company records
3. Prepare the FS
4. Show FS to shareholders at AGM
5. File the FS with CH on time
6. Duties re sustainability (see later on)

Question 2

Auditors rights (3)

Answer 2

1. To access company’s books and accounts at all times
2. To seek information from any employee of the company
3. To attend any general meetings of the company.

Question 3

Things considered re fraud by auditors (5)

Answer 3

1. Unique position of management to commit fraud
2. Signs of earnings manipulation
3. Internal + external factors that could be an incentive to commit fraud
4. Unusual/unexplained changes in behaviour/lifestyle of management/employees
5. Allegations of fraud that have been made

Question 4

If an auditor suspects bribery is present what should they do?

Answer 4

Report the suspicion to the National Crime Agency (NCA) under the Proceeds of Crime Act 2002 (POTA).

Question 5

Audit firms responsibilities re ML (4)

Answer 5

1. Appoint MLNO
2. Client due diligence - CDD
3. Training
4. Record keeping - maintain records from CDD and SARs for 5 years after the engagement has ended

Question 6

Auditors responsibilities re ML (2)

Answer 6

1. Report suspicions
2. Avoid tipping off