6/23/22, 10:13 PM TestReach

Beneifts of  Auadit.

1. High Quality information which is more relaibel improving the reputation in market
2. Indenpendece view and Verificaiton may be useful to management.
3. Reduce the risk of managemet bias and fraud by acting as a detterent.Auidor also detect frauds
and errors
4. Enhense the credebility of Finincial statments for the intended users eg tinax authoritees and
lenders etc.
5. Deffeicney in internol contorl is also higlight by the audito

Elements of assurance engagement.

1.Three party involment

Practactioner The reviever of the subject matter to provide assuranve

Intended users The users of the subject matter to make economic decisions Eg tax authorites
and lendres etc.
Responsible parties The party responsible for the preparation fo the subject matter Eg
directors.

2.Appropriate subject matter

The information subject to examination by the practioner.

3.Suitable criteris

The criteria which subject matter will be evaluatled Eg IFRS.

4.Appropriate sufficient evidence

sufficinet appropriate evience is needed to provide basis for the opinion.

5.Written assurance report

The Output of the assurance engagement presentign an opinion about the subject matter.

Reasonable Assurance engagement Limited Assurance engagement

Gahter sufficient apporpriate evidence to draw a Gather sufficient appropriate evnidence to dram a
reasnabl conclusion. limited assurance conclusion.
Peroform very thorough procedures to obtain Perform less procedure to obtain sufficient
sufficient approriate evidance including test of appropriate evidance mostly analyticial
control and substantive procrdurs. procedures and inquires.
Condludes that the subject matter conforms will all Conclude that the subject matter with respect to
matter against the suitable criteria. suitable criteria is pulsible in the circumstances.
Give a positive worded assurance conclusion. Give a negetive worded assurance conclusion.
GIven a high level of assurance. GIve a moderate or low level of assurance.
In our Opinion,The finicial statements give true Nothing have come to attention,On which we
and fair view as of and SOPL,SOFP,SOCF with belive that the Finincial statments are not
the IFRS. prepared in all material aspects with the IFRS.

https://cbept.accaglobal.com/tr-candidate/exam 1/5
6/23/22, 10:13 PM TestReach

   

The corporate Governance code.

The OECD introduce six princoples of Corporate Governance in order to guide the policy makers
when the set corporate governance code for their country.

1. Ensuring the effectivness of corportate governance framework.

2. The right and equitable treatment of the shareholders and their key ownership function.
3. Inversters,and other stakeholdres
4. Disclosure of transfercy.
5. The role of stakeholders in corporate governance
6. The responsibility of board.

The UK Corporate governance code reflect the OECD.The code split by five parts.

Board leadership and company purpose

Remunearation
Divisoin of responsiblities
Audit risk and internal control
Compariosn,Evaluaton and succesion.

Chapter 3 TYU 1.Answer

(A)

      As theso  Murre co is a non listed company so they dont need to have been comply with the codes
of the Corporate governance.Han They can chossse to have comply with codes of Corportae
govenance to increase confidcace and build positive image.Once they have been listed then they
must have to comply with the codes of corporate governance.

(B)

Strenghts of Murry co

The company have NEDS which will bring some independece view to decision making and will
the power to balance the view of excetive director
There is an audit comitte which will reduce the risk,this means that ther is group foucused of the
finincial statement of the buisness
There is a remuneration committe which will bring some independace and fairness to the
process of salary and remuneration.

(C)

Weakness Recomendation

There are not enough NEDs

Cororate governance code required the bored

Atleast 3 more NEDS should be employed to
have to be balanced there should be atleast this
balance the bared.
means that the exective directores can pass all
there proples and reduce the effectiveness of the
NEs

https://cbept.accaglobal.com/tr-candidate/exam 2/5
6/23/22, 10:13 PM TestReach

The NEDs are not independent The both directors should be removed and
replaced by new Independent NEDs.
The current NEDs are not independet the
independet ned will challenge the decision of ED
but they both are not independet so they will not
question the decisoin and the ED can make
decision for their own intrest rather then company
intrest.

There is no chair

The Corporate governance principles require ther

sould be an independet charir to run the bored ED
and NEDs chair mettings Ther should be a independet chair.

This is to ensure that there is not to much power in

hand of one person so two rules can not be fulfilled
by one person

The contract is not ending

According to Corporate governance principles the

directors shold be re elected every year and the
After 12 months there should be re election.
NED cant be ned for more then 5 years.

In order to enusre the work on best intrest of the

company.

The ED should be removed from the

The ED in the Remuneration commiittee
remuneration committee and the newly NED
According to Corporate Governance Princples the should be part of it
remuneratoin commitee should only inculde NEDs
The salary of bored is decided by committee and
the ED can award excessive pay.
the remuneratio of NED will be decided by board.

The ED in audit committee

The ED should be removed from the comiitte and
Accourding to principles of corporate governance
the audit commitee should be only of NEDs to the newly NEDs will be part of commiitee.
ensure independace and assurance.

No body in the audit commitee are finincial

expertise. When hiring new NED the company should look
to one of them should be finincail expertie.
Atleast one of the NED shold be finincial expertie
in order to put valuable input

https://cbept.accaglobal.com/tr-candidate/exam 3/5
6/23/22, 10:13 PM TestReach

Chapter 3 TYU. 2

Corporate Governance deficciency  Outcome recomendation

Owner is CEO and also Chair of the company.

According to the princoples of corporate

governnce the chair and NED shoud not be same
There sould be an independed chair.
person.

Here the owner have too much power over teh key
decision of the company.

No Formal target are set and no reviews

There should a formal target for the direcotors and
Ther shoud be a formal targeter for the mangmet
the performance should be reviewed on a regular
and alos the reviews to ensure effectiveness.
interval of time.Director should be requird to
The performance will not reviiew can lead to poor explain any under performance.
performance.

The directors ratio in 5:2

ED can dominte the decisios will not be in thre 3 more NEDs need
intrest of the company.

There is no Remuneration commitee.

The owner is paying salaries may pay a high or Remuneration commite consisit on NEDs should
low salary also can pay more to itslef. be established.

can pay more to ED to reverse decisoin.

It is belived that the internol control in reviewed by

external auditor. The audit commitee should consider need for the
internal control system if the audti commitee
External auditor will only look at the control as the consider that the internal control function are not
control relevent and effective for audit process he required they have to say in annual reports how
can not enusre and inspect the effectivness of the internal assurance has been achieved.
internal contol

Owner will appoint all the directors.

A nomination commitee shold be established
Owner will apoint those directoes who will supprot consist of NEDs.to apoint director to ensure that
their decision nd will vote him ther is a clear there is no bias.
misconduct

https://cbept.accaglobal.com/tr-candidate/exam 4/5
6/23/22, 10:13 PM TestReach

https://cbept.accaglobal.com/tr-candidate/exam 5/5