ACCA AA · Chapter 7 · Question 5 of 8
Under ISA 250, for which category of laws and regulations must the auditor obtain sufficient appropriate audit evidence regarding compliance?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) Those generally recognised to have a direct effect on the determination of material amounts and disclosures, such as tax laws
Explanation
ISA 250 distinguishes laws with a direct effect on the financial statements, such as tax and pension laws, for which the auditor obtains sufficient appropriate evidence of compliance, from other laws that are fundamental to operations, for which the auditor performs specified procedures such as enquiry and inspection of correspondence. The auditor cannot be expected to test compliance with every law.
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