Module: Audit and Assurance
Lecture 2 – Audit Regulation
Audit Regulation
What is regulation? Directions for people to follow
Why is there a need for regulation? Regulations enables auditors to be
respected. So that scandals will be limited.
Corporate governance regulates directors
(1) Harmonisation all follows the same procedure
(2) Focus on audit quality so that an audit report is respected
(3) Ethical code of conduct auditors are seen as independent
Three sets of regulatory guidance
(1) Code of ethics auditors must conduct themselves in the moral way
(2) Auditing standards must follow the ISA procedure
(3) The Corporate Governance Code in the UK directors tend to be a little
bit careless so there needs to be a code for them to follow for the benefit
of shareholders.
Example of national laws & guidance
Company Law (Companies Act 2006) is there to regulate auditors. It says who
should be an auditor (that they must be qualified and supervised by
organisations such as the ACCA); how auditors should be paid and how they
should be appointed.
What are the responsibilities of the auditor? The Company Law regulates that.
The Sarbanes Oxley Act in the US this is an international standard now
How is an auditor regulated?
They are regulated by the audit profession itself
IFAC Internal Federation of Accountants
The main body that regulates auditing work is IFAC
IFAC Code of Ethics
IAASB International Auditing and Assurance Board
ISA International Standards on Auditing
ISCQ International Standard on Quality Control
They take a topic which is important, then make recommendations on it, then
come out with a standard which is then applied to the profession.
Lecture 2 – Audit Regulation
Audit Regulation
What is regulation? Directions for people to follow
Why is there a need for regulation? Regulations enables auditors to be
respected. So that scandals will be limited.
Corporate governance regulates directors
(1) Harmonisation all follows the same procedure
(2) Focus on audit quality so that an audit report is respected
(3) Ethical code of conduct auditors are seen as independent
Three sets of regulatory guidance
(1) Code of ethics auditors must conduct themselves in the moral way
(2) Auditing standards must follow the ISA procedure
(3) The Corporate Governance Code in the UK directors tend to be a little
bit careless so there needs to be a code for them to follow for the benefit
of shareholders.
Example of national laws & guidance
Company Law (Companies Act 2006) is there to regulate auditors. It says who
should be an auditor (that they must be qualified and supervised by
organisations such as the ACCA); how auditors should be paid and how they
should be appointed.
What are the responsibilities of the auditor? The Company Law regulates that.
The Sarbanes Oxley Act in the US this is an international standard now
How is an auditor regulated?
They are regulated by the audit profession itself
IFAC Internal Federation of Accountants
The main body that regulates auditing work is IFAC
IFAC Code of Ethics
IAASB International Auditing and Assurance Board
ISA International Standards on Auditing
ISCQ International Standard on Quality Control
They take a topic which is important, then make recommendations on it, then
come out with a standard which is then applied to the profession.
