| A8. | Certain laws and regulations are well-established, known to the entity and within the entity's industry or sector, and relevant to the entity's financial statements (as described in paragraph 6(a)). They could include those that relate to, for example: |
| The form and content of financial statements9a; |
| Industry-specific financial reporting issues; |
| Accounting for transactions under government contracts; or |
| The accrual or recognition of expenses for income tax or pension costs. |
| In the UK and Ireland, these laws and regulations include: |
| Those which determine the circumstances under which a company is prohibited from making a distribution except out of profits available for the purpose9b. |
| Those laws which require auditors expressly to report non-compliance, such as the requirements relating to the maintenance of adequate accounting records9c or the disclosure of particulars of directors' remuneration in a company's financial statements9d. |
| Some provisions in those laws and regulations may be directly relevant to specific assertions in the financial statements (for example, the completeness of income tax provisions), while others may be directly relevant to the financial statements as a whole (for example, the required statements constituting a complete set of financial statements). The aim of the requirement in paragraph 13 is for the auditor to obtain sufficient appropriate audit evidence regarding the determination of amounts and disclosures in the financial statements in compliance with the relevant provisions of those laws and regulations. |
| Non-compliance with other provisions of such laws and regulations and other laws and regulations may result in fines, litigation or other consequences for the entity, the costs of which may need to be provided for in the financial statements, but are not considered to have a direct effect on the financial statements as described in paragraph 6(a). |
| A8-1. | In the UK and Ireland, the auditor's responsibility to express an opinion on an entity's financial statements does not extend to determining whether the entity has complied in every respect with applicable tax legislation. The auditor needs to obtain sufficient appropriate evidence to give reasonable assurance that the amounts included in the financial statements in respect of taxation are not materially misstated. This will usually include making appropriate enquiries of those advising the entity on taxation matters (whether within the audit firm or elsewhere). If the auditor becomes aware that the entity has failed to comply with the requirements of tax legislation, the auditor considers whether to report the matter to parties outside the entity. |
| 9a In the UK under The Small Companies and Groups (Accounts and Directors' Report) Regulations 2008 (SI 2008-409) and The Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (SI 2008-410) or The Companies (Amendment) Act, 1986 in Ireland. |
| 9b In the UK under Section 830 of the Companies Act 2006 or Section 45 of the Companies (Amendment) Act, 1983 in Ireland. |
| 9c In the UK under Section 498 of the Companies Act 2006 and, in Ireland, under Section 193 and 194 of the Companies Act, 1990. |
| 9d In the UK under Section 497 of the Companies Act 2006. There is no equivalent in Ireland. |
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