S 301 2 a small proprietary companys financial report

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s 301 (2) - A small proprietary company's financial report for a financial year does not have to be audited if: (a) the report is prepared in response to a direction under section 293 ; and (b) the direction did not ask for the financial report to be audited Performing the audit s 307: auditor must form an opinion about whether: a) The financial report is in accordance with the Act - including compliance with accounting standards (ss296 and 304) and true and fair view (ss297 and 305) b) The auditor has been given all necessary information, explanation and assistance c) The company has kept financial records sufficient to enable a financial report to be prepared and audited d) The company has kept other records and registers as required by the Act Reporting to members:
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S 308(1): the auditor must report to members on whether the auditor is of the opinion that the financial report is in accordance with the Act - including compliance with accounting standards (s296) and true and fair view (s297) S 308(2): the report must quantify the effect that any non-compliance with accounting standards has on the financial report S 308(3): the report must describe any defect or irregularity in the financial report S 308(3A): the report must include any statements or disclosures required by the auditing standards S 308(5): an offence is an offence of strict liability S 250RA: the auditor of a listed public company must also attend its annual general meeting and answer questions (see also s 250T) The auditor must also report possible breaches of the Corporations Act to ASIC (s311); auditors separately report annually to ASIC about their own audit activities (s1287A) Auditor’s rights: s 310: Statutory rights of access at all reasonable times to the books May reasonable require information, explanations or other assistance of any officer s 312: officers’ correlative obligations Independence of Auditor Statutory tests of independence for auditors Test is “Auditing Standards” – s 336 The AUASB (Auditing and Assurance Standards Boards) – independent statutory agency s 324CA: General requirement for auditor independence – auditors. Auditor’s obligations in relation to a conflict of interest situation , including “as soon as possible... [to] take all reasonable steps to ensure that [it] ceases to exist”; see also ss324CB, 324CC s 324CD: meaning of conflict of interest situation: “not capable of exercising objective and impartial judgment...” s 324CE - particularly s324CE(5) - and s324CH: prohibited relationships ; see also ss324CF, 324CG Sections 324DA-324DD: “auditor rotation”: a listed company cannot use the same auditor for more than 5 years Auditor’s Duties Statutory duties: the most important statutory duties may be deduced from preceding slides Case law duties: Contract: contractual duties relate only to the client company (privity of contract) Tort of negligence: duties in tort relate to the client company but also can extend beyond the client company to third parties: Client company sues: Daniels v Anderson (1995) 37 NSWLR 438
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