SA 250 Auditing Standards Consideration of Laws and Regulation on Audit of Financial Statements
1. Purpose: The purpose is to establish standards on the auditor’s responsibility regarding consideration of laws and regulations in an audit of F.S.
2. Meaning of non compliance: Omission/Commission, Personal misconduct.
3. An audit cannot be expected to detect non compliance with all laws and regulations.
4. It is the Responsibility of Management for the Compliance with Laws and Regulations.
5. The following procedures may assist management in discharging its responsibilities for the prevention and detection of noncompliance with laws and regulations.
a. Developing and following a Code of Conduct.
b. Ensuring employees are properly trained and understand the Code of Conduct and
punishing strictly for non compliance.
c. Establishing a legal department to assist in monitoring legal requirements.
6. The auditor should obtain representation that management has disclosed all known actual or possible noncompliance with laws and regulations.
7. Assumption of compliance: In the absence of evidence to the contrary, the auditor is entitled to assume the compliance with these laws and regulations.
8. Communication / Reporting of noncompliance: To the Appropriate Level of
Management. Material noncompliances can be expressed by way of qualified / adverse opinion.
9. Withdrawal from the Engagement: The auditor may conclude to withdraw from the engagement when the entity doesn’t take the remedial action which auditor considers necessary.
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