Table of Contents- f8 Knowledge Summary (March/June 2018) Topic Page number

 
 
Audit exemption for small companies 
The main reasons for exempting small companies are: 
- 
for owner-managed companies, those receiving the audit report are those running the company 
(and hence preparing the accounts!) 
- 
the advice/value which accountants can add to a small company is more likely to concern other 
services, such as accounting and tax, rather than audit and which may also give rise to a conflict of 
interest under the ethics rules 
- 
the impact of misstatements in the accounts of small companies is unlikely to be material to the 
wider economy 
- 
it may also not be cost beneficial for the small entities. 
 
 
 
 
 
 
Attempt questions to check your understanding:
 
June 2015-Q5c 
 
 

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F8 KNOWLEDGE SUMMARY-SKANS SCHOOL OF ACCOUNTANCY
10 
Fundamental principles of ethics 
1.
 
Integrity: Members should be straightforward and honest in all professional and business relationships. 
Auditors should not knowingly be associated with reports, returns, communications or other 
information where they believe that the information contains a materially false or misleading 
statement. 
2.
 
Objectivity: Members should not allow bias, conflicts of interest or undue influence of others to 
override professional or business judgements. 
3.
 
Professional competence and due care: to maintain professional knowledge and skill at the level 
required to ensure that a client receives competent professional services, and to act diligently and in 
accordance with applicable technical and professional standards.