Rush is the engagement partner on the audit and has asked the process of gaining
ID: 2334084 • Letter: R
Question
Rush is the engagement partner on the audit and has asked the process of gaining an understanding of the client, in accordance wit the group investigating the industry and economic factors, an at the entity level. J a wide range of issues. He has a meeting arranged committee, including the chair of the committee, Stella South, who, like the other m committee, is an independent director. members of the audit team to begin the h AS 2110. One audit manager leads d another helps Jeffrey consider issues etfrey will hold discussions with members of the audit committee and will discuss for next week with the four members of the audit embers of the audit Required a. Make a list of the main factors that will be considered by each audit manager's group. b. Based on the above information, can you conclude that Ajax Inc. complies with Section 301 of the Sarbanes-Oxley Act regarding its audit committee? Explain.Explanation / Answer
The List of the main factors that will be considered by each audit manager,s group.
(i) Entity Level (Refer to Para A23-A27 of ASA 315): Team will be trying to gain an unnderstanding of the Client he will keep in mind the following things.
1. Client's Structure Complexity like subsidaries, location, investment, assets etc
2. The relationship between the owners and other people of entities
3. Ownership of owners and other people.
Factors to consider include
1. Business Operation: This factors include day to day business operations such as revenue, production, markets, location, investment, key customers and suppliers, Reseach and Development activities. etc
2. Investments: This factor include the company's investment in new or planned acquistions, securities, loans, capital investment etc
3. Financing: This factor include how much of the company's finance is from debt, equity etc and major subsidaries and beneficial owners.
4. Another factor is Financial Reporting issues such as principles and practises usually applied as per the standards, revenue cost recognition, fair value of accounting, etc
5. Changes from prior periods in any of these factors
(ii) Industry and economic effects (Refer to para A17-A23 of ASA 315):
In these all factors related to industry and econmic reforms will be as follow
Competitive environment, Relationship between customer and supplier, energy supply and cost, the taxation policy of the overnment. Balance of Payments, Forein Exchange, Foreign Direct Investment, general economic conditions, nterest rates availability of finance, and inflation etc
(II) Sarbanes Oxley Act, It is also referred as SOX. This act is passed to protect the interest of the investors from the fraudulent activities by the companies.
Section 301 of the SOX, talks about the function of audit committee and says, " Each member of the audit committee of the issuer shall be a member of the Board of Directors (BOD) of the issuer and otherwise be indepedent.
So yes based on the above statement we can conclude that the Ajax Ltd complies with the Section 301 of the SOX regarding its Audit Committee.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.