ISA 250 ”Consideration of laws and regulation in the audit of financial statements” deals with the auditor’s responsibilities to consider laws and regulations when performing an audit.
To verify the compliance of laws and regulations, auditors is required to consider the following indicators:
- Investigation by regulatory organizations, government departments or payments of fines, additional taxes or penalties;
- Payment for unspecified services or loans to consultants related parties or employees;
- Payment without proper exchange control documentation;
- Adverse media comment;
- Purchase at prices significantly above or below market price;
- Unusual payments in cash;
- Usual payments towards legal and retainer ship fees;
- Unauthorized transactions or improperly recorded transactions;
- Existence of an information system which fails to provide an adequate audit trail;
- Unusual transactions with companies registered in tax havens;
- Payments for goods and services made other than to the country from which the goods or services originated;
- Sales commission or agent fees that appear excessive in relation to those ordinarily paid by the entity or in its industry or to the services actually received.