SOLUTION AUDIT AND INTERNAL REVIEW NOV 2012

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SOLUTION AUDIT AND INTERNAL REVIEW NOV 2012(14) Relation of credit notes to sales(15) Staff turnover especially of managers(16) Budget variances(b)Five Responsibilities/Functions of Audit Committee(i)(ii)(iii)(iv)(v)(vi)(vii)To review (formally and regularly) the financial results shown by bothmanagement accounts and those presented to shareholders.To make recommendations for the improvement of management controlTo ensure that there are adequate procedures for reviewing „rights‟ circulars,interim statements, forecasts and other financial information before distribution toshareholders.To assist external auditors in obtaining all the information they need and inresolving difficulties experienced by them in pursing their independentexaminationTo deal with any material reservations of the auditors regarding the company‟smanagement, its records and its final accounts, including the manner in whichsignificant items are presented.To facilitate a satisfactory working relationship between the management andauditors, and between the internal and external audit functions.To be responsible for the appointment of auditors as well as fixing theirremuneration.(viii) To be available for consultation with the auditors at all times, if necessary,without the presence of management to discuss regularly and review theprocedures employed by the auditors.(ix)To be concerned with all matters relating to the disclosure by the accounts of atrue and fair view for the benefit of all users.(c) (i) An officer of the company or of any associated company;(ii)(iii)(iv)(v)(vi)A person who is a partner or in the employment of an officer of the company, orof any associated company; save that partnership with a person acting as aSecretary or Registration Officer of the company or any associated company shallnot constitute a disqualification;An infant;A person found by a competent court to be of unsound mind;A body corporate except that members of an incorporated partnership may beappointed;Anyone in respect of whom an order has been made under section 186 of theCode so long as such order remains in force unless leave to act as auditor of thecompany concerned has been granted by the court in accordance with the saidsection;Page 6 of 8
SOLUTION AUDIT AND INTERNAL REVIEW NOV 2012(vii)An un-discharged bankrupt, unless he shall have been granted leave to act as anauditor of the company concerned by the court which adjudged him bankrupt.SOLUTION 5(a) (i) Planning the AuditThe following is a description of desirable planning procedures for the audit ofLAMPS LTD.(1) Read the previous years audit files paying particular attention to points raised anddifficulties encountered. Apart from giving the new auditor an opportunity ofbecoming familiar with the audit, this will enable him to form a view on theextent to which the current audit may be affected by items recorded in theprevious year‟s audit file.(2) Assess the effects of changes in legislation (Companies Code) or in accountingpractices.(3) Review interim accounts, management accounts statements issued in connectionwith stock exchange requirements.(4) Consult with senior staff of the clientThe object of the two procedures above, it to enable the auditor to appraisehimself of the current trading circumstances and significant changes to thebusiness, its personnel, its locations and accounting procedures.(5) List the timing requirements of the audit. This will involve considerations ofwork division between interim, year-end and final audits. It will also benecessary to consider the clients requirements and abilities in connection with thepreparation and printing of accounting statements and the dates of meetings.(6) Consider the degree of co-operation that can be experienced with internal audit.(7) Determine he need for the preparation of audit working schedules and the degreeto which they can be supplied by the client.(8) Assess the availability of staff of the different levels of experience and ability andendeavour to match the available staff with the particular needs of this audit.(9) Brief the staff on the particular problems of this audit. They should be madeaware of the existence of related parties and the need for investigation of allmatters where they are put upon enquiry.(10) Prepare a memorandum setting out the approach to be adapted to the audit. Thismemorandum should state in outline:(a)(b)(c)Each item on the financial statement and how, when and by whom, it willbe verified.The timing requirements that need be met.Staff usage with a time budget for each section of the audit.Page 7 of 8
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SOLUTION AUDIT AND INTERNAL REVIEW NOV 2012

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