9 Questions
Question 1
Why is it important for auditors to be able to identify related parties in a company?
Answer 1
To identify any relationships that may transgress legislation when conducting business transactions.
Question 2
What is the solvency and liquidity test in relation to the Companies Act?
Answer 2
It refers to the ability of a company to ensure that the assets of the company fairly valued, equal or exceed the liabilities of the company, fairly valued at any reasonable point in time.
Question 3
What is the responsibility of a company's directors in relation to the solvency and liquidity test?
Answer 3
To ensure that the company satisfies the solvency and liquidity test when making certain decisions and/or passing resolutions.
What is the solvency and liquidity test?
The ability of a company to ensure the assets of the company exceed the liabilities of the company
Why is it important to identify related parties?
To ensure compliance with legislation when conducting business transactions
What is the purpose of the self-assessment question at the end of the lesson?
To test your understanding of the solvency and liquidity test
Test your knowledge on identifying related parties and understanding the terms control, consanguinity, and affinity with this quiz. As an auditor, it's crucial to recognize any relationships that may violate legislation during business transactions. Sharpen your skills and improve your understanding of this important aspect of the Companies Act.
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