Understanding the auditor’s responsibilities
- Scope and purpose of ISA 250.
- Responsibilities of management, those charged with governance and the auditor.
- Distinguishing laws with a direct effect on financial statement amounts and disclosures from other laws relevant to the entity’s operations.
- Understanding the relationship between ISA 250, NOCLAR and reportable irregularities.
Identifying relevant legislation and assessing audit risk
- Identifying applicable legislation by industry and business activity.
- Considering non-compliance during audit planning and risk assessment.
- Linking legal and regulatory risks to potential material misstatements.
- Using inquiries, inspection of correspondence and other audit procedures to identify indicators of non-compliance.
- Recognising warning signs involving fraud, bribery, corruption and money laundering.
Responding to suspected or identified non-compliance
- Obtaining an understanding of the matter and gathering further information.
- Evaluating the potential effect on the financial statements and audit evidence.
- Considering materiality, the nature of the conduct and wider public-interest implications.
- Communicating with the appropriate level of management and those charged with governance.
- Determining when legal advice or other specialist assistance may be necessary.
- Assessing management’s response and the need for further action.
Applying NOCLAR and evaluating reporting obligations
- Applying the NOCLAR provisions of the applicable professional Code.
- Identifying potential reportable irregularities under the Auditing Profession Act.
- Understanding reporting and escalation processes, including applicable deadlines.
- Distinguishing reporting to IRBA from other statutory reporting obligations.
- Considering reporting to CIPC or other authorities where the relevant legal requirements apply.
- Recognising potential reporting obligations under PRECCA and FICA.
- Managing confidentiality and restrictions on disclosure.
Concluding, documenting and reporting
- Evaluating the implications for the auditor’s report.
- Considering continued association with the client and possible withdrawal, where legally permitted.
- Documenting significant findings, professional judgements, consultations, communications and actions under ISA 230.
- Understanding the potential consequences of failing to respond or report appropriately.
Practical application: Integrated case study
- Identify the relevant legal and ethical requirements.
- Distinguish an audit finding from a potential NOCLAR matter or reportable irregularity.
- Determine the appropriate escalation, communication and reporting steps.
- Prepare a documented conclusion and action plan.
Learning outcomes
By the end of the course, participants should be able to:
- Identify legal and regulatory matters relevant to an audit.
- Apply ISA 250 when assessing and responding to non-compliance.
- Distinguish between ISA 250 responsibilities, NOCLAR obligations and statutory reporting requirements.
- Evaluate appropriate communication, escalation and reporting actions.
- Document defensible conclusions and assess the implications for the audit engagement.
