Dinpaye Limited processes and packages portable water for local consumption. The factory is situated in a valley in a first-class residential area of the city. A major road used by most residents runs in front of the factory. Often, this road is flooded with spill-over of water from the factory, thus hindering vehicular and pedestrian movement. Management of the company on such occasions uses the services of a contractor to pump out the water from the road. This situation contravenes the provisions of the Factories, Offices and Shops Act 1970, Act 328. 

Dinpaye Limited has engaged Eagle-Lion & Associates as the auditors. In their preliminary tour of the factory, the senior partners became aware of the flooding situation in the area. Back in the office, the senior partners consulted ISA 250 “Consideration of laws and regulations in an audit of financial statements” for guidance on the auditor’s responsibility to consider laws and regulations in an audit of financial statements before carrying out the audit assignment.

Required:

(i) State examples of the possible type of information that might have come to the auditors’ attention that might indicate non-compliance with the Factories, Offices, and Shops Act.

(ii) What the auditors should consider when evaluating the possible effect on the financial statements for non-compliance with the law according to ISA 250.

Answer rating: 100% (QA)

Answer I An auditor is a qualified professional hired b... View the full answer