Question

15. AB Accountants have been invited to become the auditors of XY Ltd, a company with a poor reputation since several senior managers were convicted of corruption recently. The company is adamant that it has now changed its culture, and is hoping that AB Accountants will become its auditors as part of this new ethical outlook. Identify possible safeguards AB Accountants might consider using.

Answer 1

1. Implement and Monitor the Internal Controls:

Check whether Internal Controls in the company Exist,whether they are performing Effectively and Efficiently or not

Ensure Qualified staff is recruited in Internal Compliance Department

2. Look for whether they are any excess payments made to third Parties in cash or transfered to 2 or more accounts with out proper controls

3. Go through the Related party transactions since major transactions to nullify the tax effect is carried out through related parties and ensure tax compliance in this regard

4. Go through the Previous year errors are rectified or not if still pending quantify its effect on the current period

5. Ensure Proper Reporting regarding the occurence of non compliance will be reported to the management and necessary action is taken immediately