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Responsibilities and powers of UK external auditors
is entirely accounted for by current input data and processing. The above controls should recognise that errors can occur because of a diversity of factors including erroneous data, faulty programming, machine error or loss or distortion of data written onto magnetic storage media. Adequate processing controls should cover: - programs, to ensure that all programs and program changes are rigorously tested and properly authorised, that documentation is complete and current, that operational programs cannot be tampered with and that the correct version of the program is in use; - procedures to ensure that the system is not subverted by faulty procedures, through the use of formal procedure manuals, log books, proper separation of duties, proper supervision, and careful inspection and balancing of controls and "audit trail" documentation; - master files to ensure usage of the correc't version for each processing cycle (achieved by means of proper external labels, "header label" messages, library procedures and reconciliation of inputs to outputs. Most control loopholes leading to system failure or fraud are the result of insufficiently rigorous attention to the above.
Sometimes there is doubt over what obligations an external RESPONSIBILITIES auditor has to detect fraud and over his powers to inspect and ANDPOWERS OF UK demand information. The following summary of Statutory Duties and Powers of UK auditors is based on a paper presented by Alec EXTERNAL AUDITORS Rabarts , FCA, to a recent conference for the Institute for International Research. AUDITOR'S STATUTORY DUTIES IN THE UK The auditors' statutory duties, so far as companies are concerned, are set out in the Companies Acts 1948 and 1967 and include the requirements to: (a) make a report to the members on accounts examined by the auditors (and on every balance sheet, profit and loss account and group accounts laid before members in general meeting during period of office); (b) state whether accounts have been properly prepared in accordance with the legislation; (c) state whether a true and fair view is given of the company's state of affairs as at the end of it's financial year; (d) state whether a true and fair view is given of the company's profit or loss; (e) state whether a true and fair view, so far as concerns members of the company, is given of the company's and subsidiaries' state of affairs and profit in the case of group accounts; (f) carry out such investigations as will enable the auditor to form an opinion as to whether proper books of account have been kept by the company and proper returns adequate for their audit have been received from branches not visited by them; (g) carry out such investigations as will enable the auditor to form an opinion as to whether the company's balance sheet and (consolidated) profit and loss account are in agreement with the
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books of account and returns; (h) to state whether proper books have not been kept; (i) to state whether accounts are not in agreement with records and returns; (j) to state that they have failed to obtain all the information and explanations necessary for the purposes of the audit, if such is the case; (k) to provide details of loans to officers if such information is not given in the accounts; (1) to provide particulars of remuneration to directors and certain employees if such information is not given in the accounts; (m) to state whether there are, or are not, circumstances connected with his resignation which he considers should be brought to the notice of members or creditors. Members of the recognised UK accounting bodies are also required: (n) to report departures from standard accounting practice. The Stock Exchange Listing Agreement seems to require auditors: (0) to report noncompliance with UK and international standard accounting practice.
AUDITOR'S STATUTORY POWERS The auditor's powers under the legislation are: (a) and (b) and his
to have unfettered right of access at all times to the books accounts and vouchers of the company; to require from the officers of the company such information explanations that he thinks necessary for the performance of duties; (c) to obtain such information and explanation from subsidiary companies and their auditors as the holding company auditors may reasonably require; (d) to attend any general meeting of the company; (e) to receive all notices or other documents relating to general meetings which any shareholder is entitled to receive; (f) to be heard at any general meeting on matters concerning the auditors; (g) to receive forthwith a copy of a notice to remove an auditor; (h) to require a company to issue representations to members where the auditor is to be removed (unless representations are defamatory); (i) to attend the general meeting at which his term of office would have expired, had he not been removed; (j) to attend a general meeting at which the vacancy caused by his removal is to be filled; (k) to receive notices of and be heard at any meeting on matters which affect him as former auditor; (1) to requisition an extraordinary general meeting in connection with his resignation as auditor; (m) to receive notices of, attend and be heard at meetings on matters which concern him as auditor of the company before he resigned; (n) to have his remuneration fixed by the company in general meeting or in such manner as the company may determine.
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Sometimes there is doubt over what obligations an external RESPONSIBILITIES auditor has to detect fraud and over his powers to inspect and ANDPOWERS OF UK demand information. The following summary of Statutory Duties and Powers of UK auditors is based on a paper presented by Alec EXTERNAL AUDITORS Rabarts , FCA, to a recent conference for the Institute for International Research. AUDITOR'S STATUTORY DUTIES IN THE UK The auditors' statutory duties, so far as companies are concerned, are set out in the Companies Acts 1948 and 1967 and include the requirements to: (a) make a report to the members on accounts examined by the auditors (and on every balance sheet, profit and loss account and group accounts laid before members in general meeting during period of office); (b) state whether accounts have been properly prepared in accordance with the legislation; (c) state whether a true and fair view is given of the company's state of affairs as at the end of it's financial year; (d) state whether a true and fair view is given of the company's profit or loss; (e) state whether a true and fair view, so far as concerns members of the company, is given of the company's and subsidiaries' state of affairs and profit in the case of group accounts; (f) carry out such investigations as will enable the auditor to form an opinion as to whether proper books of account have been kept by the company and proper returns adequate for their audit have been received from branches not visited by them; (g) carry out such investigations as will enable the auditor to form an opinion as to whether the company's balance sheet and (consolidated) profit and loss account are in agreement with the
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books of account and returns; (h) to state whether proper books have not been kept; (i) to state whether accounts are not in agreement with records and returns; (j) to state that they have failed to obtain all the information and explanations necessary for the purposes of the audit, if such is the case; (k) to provide details of loans to officers if such information is not given in the accounts; (1) to provide particulars of remuneration to directors and certain employees if such information is not given in the accounts; (m) to state whether there are, or are not, circumstances connected with his resignation which he considers should be brought to the notice of members or creditors. Members of the recognised UK accounting bodies are also required: (n) to report departures from standard accounting practice. The Stock Exchange Listing Agreement seems to require auditors: (0) to report noncompliance with UK and international standard accounting practice.
AUDITOR'S STATUTORY POWERS The auditor's powers under the legislation are: (a) and (b) and his
to have unfettered right of access at all times to the books accounts and vouchers of the company; to require from the officers of the company such information explanations that he thinks necessary for the performance of duties; (c) to obtain such information and explanation from subsidiary companies and their auditors as the holding company auditors may reasonably require; (d) to attend any general meeting of the company; (e) to receive all notices or other documents relating to general meetings which any shareholder is entitled to receive; (f) to be heard at any general meeting on matters concerning the auditors; (g) to receive forthwith a copy of a notice to remove an auditor; (h) to require a company to issue representations to members where the auditor is to be removed (unless representations are defamatory); (i) to attend the general meeting at which his term of office would have expired, had he not been removed; (j) to attend a general meeting at which the vacancy caused by his removal is to be filled; (k) to receive notices of and be heard at any meeting on matters which affect him as former auditor; (1) to requisition an extraordinary general meeting in connection with his resignation as auditor; (m) to receive notices of, attend and be heard at meetings on matters which concern him as auditor of the company before he resigned; (n) to have his remuneration fixed by the company in general meeting or in such manner as the company may determine.
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