Assurance And Auditing Service Report

Running head: AUDITING AND ASSURANCE SERVICE
Auditing and Assurance Service
Name of the Student
Name of the University
Author’s Note

AUDITING AND ASSURANCE SERVICE1
Question 1
(a) What provisions of the Companies Act are Bertie, Angela and Mainbrace
not complying with?
Bertie and Angela do not have the decision-making power as they are not the
directors. As per Companies Act 2006 Statement of Proposed Officers, a statement
containing the name of the first directors needs to be provided to the shareholders
along with statement to the memorandum of association that includes the details of
the relevant capacities of the directors. Companies Act 2006 The General Duties
puts certain obligation on the directors such as doing something for organizational
wealth creation, providing indecent decision, acting with trust by avoiding conflict of
interest, proper exercise of skills, do not accepting third party associated benefits,
care and due diligence and others. As per Companies Act 2006, Section 10, it is
required to include a Statement of Capital where initial shareholders have the
obligation of specifying their capital contribution for gaining the rights for correctly
accessing the shares; and this section needs to be complied with by Bertie’s father,
Angela’s mother and their friends in case they hold majority of shares.
Mainbrace Ltd is not immune from audit as it has turnover around £12 million
and this puts the statutory obligation on the directors of appointing external auditors
for providing true and fair view on the company’s financial reports for enhancing the
decision making process. It also requires the financial management accountant to be
a certified chartered accountant for adhering to the Accounting Standards. Apart
from these, accounts need to be filled by Angela and Bertie as the directors with the
intention to report the company’s situation to the shareholders. Unethical conduct
can also be seen by Ron as the obligation is to open any envelop from Companies
House on immediate basis.
(b) What should they do as a matter of urgency to correct the situation?
The Statement of Proposed Officers should be taken into account by
Mainbrace Ltd’s shareholders for ensuring the general duties of directors are
complied with by Angela and Bertie for company’s success. Financial statements of
the company needs to be presented to the shareholders for informing them about the
company’s financial performance and position. For the detection of any error or fraud
along with conflict of interest, external auditors must be appointed by Angel and

AUDITING AND ASSURANCE SERVICE2
Bertie. There must be not be approval of accounts by both of them unless profit or
loss, assets and liabilities and financial position provide true and fair value. In line
with The International Code of Ethics for Professional Accountants, annual accounts
needs to be filled with the register by Mainbrace Ltd’s directors in the presence of a
professional and specialised accountant.
Question 2
(c) What does Cicero Ltd need to do to rectify the situation?
Preparation of annual reports is a statutory requirement which needs to be
take into account by Cicero Ltd; and this indicates towards the need to hire a
qualified professional accountant. As per The International Code of Ethics for
Professional Accountants, five principles that are objectivity, integrity, confidentiality,
professional competence and due care and professional behaviour need to be
followed by the professional accountants. Companies Act 2006 Duty to keep
accounting records puts the obligations on the companies to maintain sufficient
accounting records for demonstrating their financial performance and financial
position; and the same act needs to be followed while preparing the financial
accounts.
Companies Act 2006 Accounts to give true and fair view puts the obligation on
the directors to ensure that the approved accounts provide true and fair view of the
company’s financial performance and financial position. By throwing away the count
sheets of inventory, Eric Chopper has failed to adhere to the required framework of
accounting. Public companies are required to keep any accounting records in the
registered office for six years and limited companies are for three years from the
date of their development; and it is mentioned in Company Act 2006 Where and for
how long the records to be kept. There is also a statutory requirement for Cicero Ltd
to maintain appoint an external auditor for forming onion on the trueness and
fairness of its financial statements to the shareholders.
(d) Who is responsible for ensuring this is properly dealt with?
Companies Act 2006 Scope and nature of general duties needs to be
maintained by the director for effectively managing the company; this includes seven
stages of legal obligations that need to be maintained by the director. Moreover,
filling the reports and accounts to the registrar on yearly basis by complying with