1. the UNIVERSITY of GREENWICH 1 September 2009 L2a Audit and assurance J. E. Spencer-Wood Lecture 2a The basic rights and duties of auditors under English Law Hong Kong ABRS students may choose to study provisions under the HK Companies Ordinance (Refer to Tse Yiu Lau, P. and Chi Yuan Lam, N. (2006) Audit and Assurance in Hong Kong Pilot or more recent texts) Malaysia / Singapore – contact local administrators Auditing and assurance

2. the UNIVERSITY of GREENWICH 2 September 2009 L2a Audit and assurance J. E. Spencer-Wood Companies Act 2006 (CA 06) The longest ever act! 1300 sections Simplified language Not a great amount affects the auditor Mainly a consolidation of accounting and auditing provisions

3. the UNIVERSITY of GREENWICH 3 September 2009 L2a Audit and assurance J. E. Spencer-Wood CA 2006 s386 - Every company must keep ‘adequate’ accounting records  The term adequate means that the records must be sufficient… –To show and explain the company’s transactions –To disclose with reasonable accuracy the financial position of the company at that time and –To ensure that the accounts comply with the relevant requirements of the law  The records must contain, in particular… –Day to day records of all sums of money received and spent and the matters to which they relate and –Records of the company’s assets and liabilities Company Law: Directors’ responsibilities

4. the UNIVERSITY of GREENWICH 4 September 2009 L2a Audit and assurance J. E. Spencer-Wood CA 2006 s394 - Directors are responsible for preparing annual accounts for each of the financial years of their company They must not approve any set of annual accounts unless they are satisfied that they give a ‘true and fair view’ of the assets, liabilities, financial position and profit or loss of their company Notes: ‘Accounts’ = Financial statements; profit and loss a/c = Income statement Company Law Directors’ responsibilities (cont.)

5. the UNIVERSITY of GREENWICH 5 September 2009 L2a Audit and assurance J. E. Spencer-Wood Main duties of Auditor CA 06 ss495-502 To REPORT whether the accounts: are properly prepared under CA 06 a/a show a TRUE & FAIR VIEW (t&f) of  The balance sheet  The profit and loss account that the DIRECTORS’ REPORT is consistent with the FS’s

6. the UNIVERSITY of GREENWICH 6 September 2009 L2a Audit and assurance J. E. Spencer-Wood Main duties CA 85 s237 To INVESTIGATE that: Proper accounting records and returns have been kept The records agree with the FS’s To STATE in report if records, information received or compliance with CA 06 are unsatisfactory Main duties CA 06 ss495-502

7. the UNIVERSITY of GREENWICH 7 September 2009 L2a Audit and assurance J. E. Spencer-Wood Main duties CA 85 s237 (cont.) If not t&f then DUTY to report it If information and explanations not received then DUTY to report it If non-compliance with CA06 (director’s emoluments) then DUTY to report it Main duties CA 06 ss495-502 (cont.)

8. the UNIVERSITY of GREENWICH 8 September 2009 L2a Audit and assurance J. E. Spencer-Wood Main rights CA 06 ss495-502 ACCESS to records at ALL times INFORMATION & EXPLANATIONS as needed Notice of, and attendance at, general meetings (GM’s) To speak at GM’s There are also rights in respect of small companies’ audit elections; also rights upon removal or resignation (ss.510-526)