Audit 1

• Beleaguered


  In a difficult situation
• Expectation Gap


  • Relax on IAS
• High-quality audits


  • When audit fee is more than $0.5 Million
  • Achieve 30 training hours
  • Obligated/beholden to the client
  • Rotation of audit staff every 7 years
• Facebook pays US $19billion to WhatsApp
• Examples


  • SIA
  • Star Search contest
• Stewardship accounting


  The owner and manager have separate entity
• Imposed


  Required by the law
• Restrictions


  • Company's Act 2006

  Accounting standards
• Prevents fraud/ Material Misstatements
• Beholden to. Eg When the auditor accepted significant benefit
• Any other factors = "Sweeping up clause"
• Eg. of factors that prevent auditor from performing would be when he audits a large client
• "C"


  Competency = (1) Technical Ability (2) Time Availability (3) Staff Availability
• Second "I"


  Integrity = Auditor cannot sign any document that he knows is misleading
• Size of the amount
• Cannot use "wrong"
• Factors that lead to audit risk
• "J"


  Audit is more of an art than science
• "S"


  Warning signs
• Lifestyle must be consistent to his occupation
• "D"


  Due care = Auditor must apply all his (1) Skills (2) knowledge (3) experience in all work done by him
• "Q"


  Quality Control = Measures implemented by an audit firm to ensure a high-quality audit is always carried out
• Need to identify 10 qualities


  • Integrity

  Competency

  Confidentiality

  Good Relational Skills

  Poses good judgmental Skills

  Exercise Due Care

  Unbiased/ objective

  Observe Ethical Rules

  Put professionalism above profitability

  Bold enough to challenge management differing opinions
• Laws governing practicing accountant
• All companies must hold an AGM at least once in a financial year
• Reasons for resignation


  • When the auditor discovers the client s engage in illegal activities such as money laundering

  When the client had expanded significantly and the auditor can no longer service the client. Example when the company goes for a listing, get listed
• Resignation letter are given to the company's secretary
• Types of meetings in companies


  • AGM (mandatory to be held very year)

  EOGM (Extra Ordinary General meeting) (if the company holds a 2nd or subsequent meeting in addition to AGM)
• AGM and EOGM are both general meeting
• Auditors are appointed by the shareholders
• At the EOGM


  • Shareholders will hear from the directors on auditors resignation

  A new auditor will be appointed
• Them = Companies House = ACRA
• Reasons


  • Incompetent

  Fees are too costly

  When the working relationship between auditors and management have broken down. Eg. When the company/client hires a new CEO
• Director can only propose, the decision is made by shareholder.
• Resolution


  An official record of decisions made at a meeting
• Minutes


  An official record of matters discussed at a meeting
• At the EOGM, there are 2 possible outcomes


  • If shareholders disagree with the director then the auditor will keep their job

  If shareholder agree with directors, then the existing auditor will be removed. A new auditor will also be appointed concurrently
• Company house in Singapore is ACRA.
• Company secretary need another certificate
• AGM or EOGM