PART A: AUDIT FRAMEWORK AND

REGULATION
CHAPTER 1: ASSURANCE ENGAGEMENT
Objective of an audit:
- Issue an opinion with reasonable assurance as to whether the financial
statements are fairly presented and free from material misstatements.

Therefore, there will be inherent limitations of audit

D12 Inherent Limitation of Audit:

Sampling – It is not practical for auditors to test 100% of transactions and so

they could apply sampling methodologies in selected balances or transactions to
test. Hence, there could be errors in items not selected for testing.
Subjectivity – The financial statements include subjective and judgement areas
which require auditors to use their own judgement in assessing whether the
financial statements are in true and fair view.
Inherent limitations of internal control systems – Internal control system is
operated by humans which human errors could arise. In addition, it can be
overridden by management or of collusion and fraud.
Evidence is persuasive not conclusive – The opinion is based on evidence that
has been gathered by auditors which include judgements and estimates that
could not give a definite conclusion.
Audit report format – The format is determined by International Standards of
Auditing (ISAs) and terminology used is usually not understood by non-
accountants. Therefore, users may not understand the audit opinion given.

Responsibilities of an auditor:
- Shareholder (/ member) appoints the auditors at the conclusion of the
ANNUAL GENERAL MEETING (/every year). They have only CONTRACTUAL
RELATIONSHIP.
- Auditors may disclose matters to third parties without their client's consent if
it is in the public interest, and they must do so if there is a statutory duty to
do so. + If the client refuses and the breach is likely to be in the public
interest, the auditor must report the matter to the appropriate authority.

Assurance Engagement:
Definition – an engagement in which a practitioner expressed a conclusion
designed to enhance the degree of confidence of the intended users about the
outcome of the evaluation or measurement of a subject matter against criteria.
J16 Elements of Assurance [ T S C E R ]

Assurance engagement will require three-party relationship comprising of:

● The intended user which is a person requiring the assurance report.
● The responsible party which is the organisation responsible for preparing
the subject matter to be reviewed.
● The practitioner who is professional will review the subject matter and
provide the assurance.

Secondly, assurance engagement will require subject matter which is the data
that has been prepared by the responsible party that requires verification. Then,
the subject matter will be reviewed or assessed against suitable criteria in order
for it to be assessed then the opinion provided. Fourth, the practitioner must
ensure that they have gathered sufficient appropriate audit evidence in order to
give the required level of assurance. Lastly, the assurance report provides an
opinion given by the practitioner to the intended user.

J15 (1) Audit Engagement VS Review Engagement

Review engagement is an alternative to audit which includes a practitioner

reviewing the financial data such as six-monthly figures and cash flow. This type
of report is appropriate for a forecast because it relates to future. It is therefore
not possible to state that the forecast is materially correct in term of true and
fair view because the forecast has not been tested against the future.

Review engagement differs from audit engagement in aspects of undertaking

procedures as it is not nearly as comprehensive to audit such as analytical
review and enquiry. In addition, review engagement does not need to comply
with ISAs.

Therefore, review engagement will provide an opinion with negative assurance

as the practitioner gathered sufficient appropriate audit evidence to be satisfied
that the subject matter is plausible but not that it shows true and fair view.
Thus, practitioners confirm that nothing has come to their attention that the
financial statements contain material misstatement.

However, audit engagement will provide an opinion with reasonable assurance

which is a high but not absolute opinion. The practitioner comforts that the
financial statements are fairly presented and free from material misstatements
in all areas.
 CHAPTER 2: PROFESSIONAL ETHICS
D20 / D17 Threats & Safeguards to Professional Ethics
Type [FASSI] (b) EXAMPLE (c) IMPLICATIONS (d) SAFEGUARDS (e)
Familiarity 1) Close relationship 1) Both hold higher positions that 1) 1 Remove and replace auditor
could influence the outcome of audit
(occur when, 2) Long association / and place family relationship above 2) 1 Rotated off for two years of
because of a close EQCR is a former AP the need of users of financial cooling period after 7 years (AP) / 2 to
relationship, statements 3 years (ATM)
members become 2 Appoint an alternative AP (AP) /
too sympathetic to 2) AP is more favourable to CLIENT AP should not serve as EQCR for 2
the interests of which will be reluctant to issue a years or involve in audit engagement
others) modified opinion and lack professional 2 Arrange regular independent
scepticism reviewer for audit engagement (ATM)

Advocacy Representing CLIENT; FIRM may be seen publicly supporting Not allowed by ACEC due to likelihood
CLIENT which not seen as having of arising material impact on financial
Acting on behalf of CLIENT; independence in appearance and statements.
independence of mind to view
Promoting CLIENT financial statements / be less likely to Decline invitation politely as it
challenge the figures included represents too great threats to
* include 3rd party independence
SD20 / SD17 Conflict of Interest 1 Notify both CLIENTs (potential and existing) and obtain consent
2 Advise both clients to seek additional independent advice
- Auditing two CLIENTS in the same industry which 2 Establish Chinese Walls by separating team with different AP and ATM
are rivals at the same time. 3 ATM need to sign confidentiality agreement
5 Regular monitoring of the application safeguards by an independent senior
individual in FIRM not involved in either audit
Intimidation 1)Removal/litigation threat/ FIRM may feel under pressure to cut 1) 1 Inform AC
fees pressure corners / not raise issues in order to 2 Consider to withdrawal from
(occur when an (satisfy the deadlines) and then signing the contract
auditor is deterred 2) Short reporting time compromise the objectivity of FIRM
from acting and quality of the audit performed 2) 1 Discuss with FD to reschedule
objectively due to timing of audit work
threats, actual or * (OTHER THREAT) 2 If not possible, inform FD that
perceived) audit needs to comply with ISA and
QC procedures
3 Consider resignation if threat
continues
Self-review 1) Provision of NAS 1 Potential acquisition is subsequently 1) 1 Decline if listed (not allowed)
[+ MT] (accounting; design controls; reflected in FS / FIRM may be less 2 Establish Chinese wall (listed) and
corporate works) likely to challenge the figures included arrange for additional review to be
(occurs when a ** Can use contingency fees / FIRM may not admit any errors undertaken / Use separate teams and
previous discovered partners (unlisted)
judgement needs
to be re-evaluated 2) Tax services 2 Preparing FS may draw the ATM 2) If FIRM prepares a tax return, there
by members inadvertently into performing is no threat.
responsible for management functions If FIRM calculates tax, yes.
that judgement)
3) Temporary assignment of 3) 1 Clarify the exact areas that
staff loaned staff will assist
(Auditor loaned / seconded to 2 If directly related to financial
CLIENT) statements, remove audit staff
[MT: assume management seconded from audit engagement
[MT: FIRM undertaking responsibility, making decisions and
management responsibilities] judgements on behalf of client] [MT:Care must be taken not to make
management decisions]
Self-interest 1) Contingent fees (% of X) 1) FIRM may feel incentivized to allow 1) 1 Not agree to the proposal
* NAS, not allowed if it is incorrect accounting treatments in 2 Declined politely as it is not
(occurs as a result significant order to maximise profits allowed by ACEC
of auditor FEE = rate x time spent 3 Communicate to TCG regarding
benefitting from audit fees is charged based on time
CLIENT in financial 2) Loan from CLIENT (bank) 2) FIRM may not be objective and lack spent, skill and experience of ATM
and non-financial professional scepticism
way) 2) 1 Review the terms of the loan. If
3) Overdue fees (perceived as 3) FIRM may seem making a loan to not, no further action.
’loan’ to CLIENT CLIENT which is prohibited by 2 If preferential, either term
ACEC / may feel pressure to agree on amended or remove ATM
 certain accounting adjustments in
order to have the last year and current3) 1 Discuss with TCG for reasons of
year’s audit fee paid non-payment
2 Request for immediate
4) Fee’s dependency on 4) FIRM could become overly reliant on settlement / agree on payment
LISTED (>15%) CLIENT and be less challenging / schedule
* UNLISTED, not major issue objective due to fear of losing such a 3 Start audit work only once
(increase client base + have significant CLIENT overdue fees paid
independent review)
4) 1 Assess if total fees exceed 15%
threshold for 2 consecutive years
5) It may be favourably disposed 2 If likely to be significant, consider
5) Gifts and hospitality towards CLIENT / be less inclined or which NAS to be undertaken
* (+) Familiarity reluctant to report, highlight and 3 If exceeds, disclose to TCG
investigate any potential errors 4 If FIRM retain all works, arrange
for pre/post issuance review to be
undertaken by external accountant or
regulatory body

5) Politely decline the offer / gifts if

value significant

6) Dispose of its shares in CLIENT’s

6) Financial interest (eg 6) FIRM may intend to maximise capital
shareholding) financial interest in CLIENT / not
suggest audit adjustments which 7) 1 Recruitment services allowed
would lead to a modified opinion and provided that CLIENT makes all
affect the share price management decisions.
2 FIRM is limited to reviewing
7) AP recruit senior / board 7) FIRM may be assumed to make qualification & shortlist of candidates
members: NED [+ MT] management decisions and 3 FIRM cannot provide recruitment
judgements services in respect of BOD who would
be in a position to influence over the
8) Employment with CLIENT: 8) FORMER is familiar with the audit FS
- Member to CLIENT plan which is to be adopted at CLIENT [MT: Care must also be taken not
- AM/AP join CLIENT’s BOD and he may also have commenced to make management or final
level work on this year’s audit decisions]

8) 1 Appoint new AM
2 Perform independent review on
the work that have been done by the
former AM
3 Modify audit plan (not familiar
with the approach)
S16 Quality Management (supervise and review)

SUPERVISING
During the audit, the supervisor should keep track of the progress of the audit
performed to ensure that the audit timetable is met and the audit partner and
audit manager is kept updated. In addition, the supervisor should consider the
competence and ability of each individual in the audit team and whether they
have sufficient time to perform the work and whether they understand the
instructions. Besides, the supervisor should also be involved in addressing the
material issues during the audit to consider the significance and modify the plan
accordingly. The supervisor should also be responsible for identifying issues for
consultation and consideration by audit manager of CLIENT.

REVIEWING
The supervisor should review the work performed by the assistant whether the
work has been performed in accordance with professional standards and other
regulatory requirements and whether the work supports the conclusion made
and has been properly documented.

Development stages of ISAs:

1. Establishment of task force to develop draft standard
2. Discussion of proposed standard at a public meeting
3. Distribution of exposure draft for public comment
4. Consideration of comments received from the public
5. Approval by IAASB members
 CHAPTER 4: PROFESSIONAL APPOINTMENT
J20 / D16 Client Screening (before accepting appointment)

The outgoing auditor’s response

Prior to accepting an audit engagement, the auditor is required to contact the
previous auditors, after obtaining permission from CLIENT, to ask for all
information relevant. For instance, whether there are any ethical or professional
reasons why the FIRM should not accept appointment.

Management integrity
FIRM needs to consider management integrity to avoid greater risk of fraud and
intimidation if there are serious concerns regarding this.

Pre-conditions for an audit

The preconditions confirm that management will use an acceptable financial
reporting framework under which they will prepare the financial statements and
confirms that management acknowledges and understands its responsibilities
for:
- Preparing the financial statements in accordance with the applicable
financial reporting framework;
- Internal control necessary for the preparation of the financial statements to
be free from material misstatement;
- Providing the auditor with unlimited access to additional and relevant
information within the entity to obtain audit evidence.

Independence and objectivity

The auditor must consider whether there are any threats to independence and
objectivity which cannot be reduced to an acceptably low level by the use of
appropriate safeguards.

Resources available at the time of the audit

FIRM must have adequate resources with the relevant experience available at
the time the audit of CLIENT is likely to be carried out. All audit staff must be
capable of carrying out the audit in accordance with International Standards on
Auditing (ISAs).
J22 / J21 / D17 Pre-Conditions of Audit

FIRM should have determined whether the financial reporting framework to be

applied in the preparation of financial statements is acceptable. Besides, FIRM
should have assessed the nature of the entity, the nature and purpose of
financial statements and whether law or regulation prescribes the applicable
financial reporting framework.

FIRM should also have obtained that the management acknowledges and
understands its responsibilities for the following:
- Preparing the financial statements in accordance with the applicable
financial reporting framework;
- Internal controls are necessary to enable the preparation of the financial
statements which are free from material misstatement;
- Providing the auditor with unrestricted access to all relevant and additional
information within the entity to obtain audit evidence.

Engagement Letter:
M20 Purpose and Content

Purpose of an engagement letter

The letter of engagement outlines the responsibilities of both the audit FIRM and
the audit CLIENT. Its purpose is to:
▪ minimise the risk of any misunderstanding between the auditor and the
CLIENT;
▪ confirm acceptance of the engagement; and
▪ forms the basis of the contract by outlining the terms and conditions of
the engagement.

Items to be included in an engagement letter

● the objective and scope of the audit;
● the responsibilities of the auditor;
● responsibilities of management;
● identification of the financial reporting framework used in the preparation
of the financial statements;
● expected form and content of any reports to be issued;
● the fact that some material misstatements may not be discovered;
● the expectation that management will provide written representations;
● the basis on which the audit FIRM will calculate its fees;
● any restrictions on the auditor’s liability;
D15 New / Revised

Engagement letters for recurring/existing CLIENTs should be revised if any of

the following factors are present:
– Any indication that the entity misunderstands the objective and scope of the
audit, as this misunderstanding would need to be clarified
– Any revised or special terms of the audit engagement, as these would require
inclusion in the engagement letter
– A significant change in nature or size of the entity’s business. The approach
taken by the auditor may need to change to reflect the change in the entity.
– A change in legal or regulatory requirements. The engagement letter is a
contract; hence if legal or regulatory changes occur, then the contract could be
out of date
– A change in the financial reporting framework adopted in the preparation of
the financial statements. The engagement letter clarifies the role of auditors and
those charged with governance, it identifies the reporting framework of the
financial statements and if this change, then the letter requires updating

J21 Professional Scepticism

Professional scepticism is defined as an attitude which includes a questioning

mind, being alert to conditions which may indicate possible misstatement due to
fraud or error, and a critical assessment of audit evidence. Examples where the
auditor should apply professional scepticism for Corley Appliances Co are as
follows:

Revenue recognition
ISA contains a rebuttable presumption that fraud in relation to revenue is high
risk and hence the auditor must apply professional scepticism to CLIENT’s
revenue recognition policies and CLIENT’s returns policy which due to the
judgement involved may be used as a way to manipulate revenue.

Warranty provision
Accounting for warranty provisions will include an element of estimation based
on previous experiences of the costs incurred by the company to repair
defective goods. The auditor should maintain professional scepticism that
warranty provisions may include management bias to either deliberately over or
understate the provision.
 CHAPTER 22: INTERNAL AUDIT
External Auditor (EA) Internal Auditor (IA)
express an opinion whether financial provide assurance in whether entity
statements are true and fair view risk, corporate governance and
internal control operating effectively
*IA not required but AC may consider the need of it

MJ18 Internal Audit Assignments / Roles

Value for money review – The IA could be asked to assess whether CLIENT is
obtaining value for money in areas such as capital expenditure / focuses on
whether the best combination of services has been obtained for the lowest level
of resources.
 Economy – Keeping the cost of resources used to a minimum.
 Efficiency – The relationship between the output from goods and services
and the resources used to produce them.
 Effectiveness – How well the organisation’s objectives have been achieved

Review of financial/operational controls – The IA could undertake reviews of

controls at head office and the power station and make recommendations to
management over such areas as the purchasing process as well as the payroll
cycle.

Monitoring asset levels – The IA could undertake physical verification of

property, plant and equipment (PPE) at the production site and head office and
compare the assets seen to the PPE register. There is likely to be a significant
level of PPE and the asset register must be kept up to date to ensure continuous
production. If significant negative differences occur, this may be due to theft or
fraud.

Regulatory compliance – CLIENT produces electricity and operates a power

station; hence it will be subject to a large number of laws and regulations such
as health and safety and environmental legislation. The IA could help to monitor
compliance with these regulations.

IT system reviews – CLIENT is likely to have a relatively complex computer

system linking production data to head office. The IA could be asked to perform
a review over the computer environment and controls.

Cash controls – CLIENT’s internal auditors could undertake controls testing over
cash payments. 70% of employees are paid in cash rather than bank transfer,
therefore on a weekly basis cash held is likely to be significant, therefore the
cash controls in payroll should be tested to reduce the level of errors.

Fraud investigations – The IA can be asked to investigate any specific cases of

suspected fraud as well as review the controls in place to prevent/detect fraud.
J12 Internal Audit VS External Audit
 External Audit Internal Audit
Objective The main objective of internal audit is
The main objective of the external to improve a company’s operations,
auditor is to express an opinion on the by reviewing the efficiency and
truth and fairness of the financial effectiveness of the company’s
statements. internal controls.
Reporting Internal auditors normally report to
External auditors report to the management or those charged with
shareholders or members of the governance. Internal audit reports not
company. External audit reports are publicly available and are only
contained within the financial intended to be seen by the addressee
statements and hence are publicly of the report. The reports are normally
available. provided to the board of directors and
those charged with governance such
as the audit committee.
Scope of work The internal auditor can have a wide
The external auditor’s work is limited scope of work and it is determined by
to verifying the truth and fairness of the requirements of management or
the financial statements of the those charged with governance.
company. Commonly internal audit focus on
the company’s internal control
environment, but any other area of a
company’s operations can be
reviewed.
Relationship with company Internal auditors are appointed by
External auditors are appointed by the management. As internal auditors are
company’s shareholders. They are normally employees of the company,
independent of the company. they lack independence. However, the
internal audit department can be
outsourced and this can increase their
independence.

4 Evaluating the work of IA: (EA can rely on IA work)

 Must be sufficiently resourced, IA must be qualified, trained and
experienced
 Free from operational responsibilities
 Chief (Head) IA should be professionally qualified
 Must be independence ie appropriate reporting to AC
 Adequate scope of work
 Keep IA manuals, work programs and AWPs
 Work supervised, reviewed and documented
 Conclusion reached consistent with results of work performed

** EA should review the IA’s working papers and re-perform a sample of the
tests again (reliance on IA’s work)

5 IA responsibility for fraud:

 Assess fraud risk and help management develop controls to mitigate fraud
  Carry regular reviews of compliance of these controls
 Undertake detailed fraud investigation on suspected frauds
 Existence of IA acts as a fraud deterrent

** the external auditor must not assign work to the internal auditor which
involves significant judgment, a high risk of material misstatement or with which
the internal auditor has been involved

J14 Outsourcing – outsourced to same firm (possible SR threat to firm)

ADVANTAGES DISADVANTAGES
Staffing: Existing internal audit department:
ENTITY wishes to expand its internal ENTITY has an existing internal audit
audit department in terms of size and department; if they cannot be
specialist skills. redeployed elsewhere in the
If they outsource, then there will be company, then they may need to be
no need to spend money in recruiting made redundant and this could be
further staff as EA will provide the costly for ENTITY.
staff members. Staff may oppose the outsourcing if it
results in redundancies.

Immediate solution: Increased costs:

As the current internal audit As well as the cost of potential
department is small, then outsourcing redundancies, the internal audit fee
can provide the number of staff charged by EA may over a period of
needed straight away. time increase, proving to be very
expensive.

Skills and experience: Knowledge of company:

EA is likely to have a large pool of EA will allocate available staff
staff available to provide the internal members to work on the internal audit
audit service to ENTITY. assignment; this may mean
In addition, the audit firm is likely to that each visit the staff members are
have staff with specialist skills already different and hence they may not fully
available. understand the systems of ENTITY.
This will decrease the quality of the
services provided and increase the
time spent by ENTITY’s employees in
explaining the system to the auditors.

Cost savings: Loss of in-house skills:

Outsourcing can be an efficient means If the current internal audit team is
to control the costs of internal audit not deployed elsewhere in the
as any associated costs such as company, valuable internal audit
training will be eliminated as EA will knowledge and experience may be
train its own employees. lost.
In addition, the costs for the internal If ENTITY then decided at a future
audit service will be agreed in date to bring the service back in-
advance. This will ensure that ENTITY house, this might prove to be too
can budget accordingly. difficult.
Flexibility: Confidentiality:
If the internal audit department is Knowledge of company systems and
outsourced, ENTITY will have total confidential data will be available to
flexibility in its internal audit service. EA.
Staff can be requested from EA to suit Although the engagement letter
the company’s workloads and would provide confidentiality clauses,
requirements. This will ensure that, this may not stop breaches of
when required, extra staff is readily confidentiality.
available for as long or short a period
as needed.
Control:
ENTITY currently has more control
over the activities of its internal audit
department; however, once
outsourced
it will need to discuss areas of work
and timings well in advance with EA.

Additional fees for EA: Independence:

The audit firm will benefit from the If EA provides both external audit and
internal audit service being internal audit services, there may be a
outsourced as this will generate self-review threat especially where
additional fee income. the internal audit work is relied upon
However, the firm will need to monitor by the external auditor team.
the fees to ensure that they do not The firm would need to take steps to
represent too high a percentage of ensure that separate teams are put in
their total fee income. place as well as additional safeguards.
As a public interest company, fee
income should not represent more
than 15% of gross practice income for
two consecutive years.
 CHAPTER 24: CORPORATE GOVERNANCE
1 CG is the systems by which listed companies are directed and controlled

2 Principles of CG Code: (Best Practices)

a) Segregation of roles – Chairman and CEO.

⮚ Chairman, head of NEDs = oversight BOD responsibilities
⮚ CEO, head of EDs (BOD) = ensures effective operations of the
company

b) NEDs – employed on part-time basis (annual fees / based on time

committed); brings experience, expertise & contacts to assist board; must
be independent (AC); board composition (half); represents sub-committees

c) BOD – must receive induction training upon joining; must have skills,
experience, independence & knowledge; subject to annual evaluation and
need to submitted for re-election at AGM by members / shareholders (not
exceeding 3 years); receive remuneration (based on long term company’s
performance); hold AGM and use AGM to communicate with shareholders

3 Audit Committee

a) Consists of: at least 50% of the board excluding Chairman (cannot be former
directors and independent)
– 3 independent NEDs
– 1 with recent and relevant financial expertise (monitor integrity of FS)
* Board chair CANNOT be a member of AC

b) Function: Report to board / shareholders as it undertakes tasks on behalf of

the board on internal control (CG will be enhanced)
: Safeguarding the privacy of whistle-blowers
: Monitoring the independence of external auditor
: Monitoring and reviewing the internal audit function
c) Benefits of AC:
● Improve the quality of the financial reporting
● Improve the internal control environment of the company
● Improve internal audit department by:
- Strengthen the position with greater independence
- Monitor and review its effectiveness and performance
● Bring external experience to the board
● Provide advice on risk management & CG to EDs
● Responsible for making recommendation on appointment of EA
● Strengthen independence of EA
● Finance director is able to raise concerns with AC

d) ANNUAL REPORT should describe the work of the audit committee

including:
– Significant issues considered relating to the financial statements.
– How it has assessed the independence and effectiveness of the external
audit process.
– Where there is no internal audit function, an explanation for the absence
and how internal assurance is achieved.
– An explanation of how auditor independence and objectivity are
safeguarded if the external auditor provides non audit services.

4 Principles of OECD (Organisation for Economic Co-operation and

Development):
⮚ Effective CG framework
⮚ Shareholder’s rights of ownership
⮚ Fair treatment of all shareholders including minority & foreign
shareholders
⮚ Recognise stakeholder’s role and rights
⮚ Ensures timely and accurate disclosure and transparency
⮚ Responsibilities of the board

MJ19 Corporate Governance Weaknesses

WEAKNESS RECOMMENDATION
The finance director is a member of The audit committee must be
the audit committee. comprised of independent NEDs only.

The audit committee should be made Therefore, the finance director should
up entirely of independent NEDs. The resign from the committee.
role of the committee is to maintain
objectivity with regards to financial
reporting; this is difficult if the finance
director is a member of the
committee as the finance director will
be responsible for the preparation of
the financial statements.
The remuneration for directors is set There should be a fair and transparent
by the finance director. policy in place for setting
remuneration levels.
The NEDs should form a remuneration
However, no director should be
committee to decide on the
involved in setting their own
remuneration of the executives.
remuneration as this may result in
excessive levels of pay being set. The board as a whole should decide
on the pay of the NEDs.
Executive remuneration includes a The remuneration of executives
significant annual profit related should be restructured to include a
bonus. significant proportion based on long-
term company performance.
For example, executives could be
Remuneration should motivate the
granted share options, as this would
directors to focus on the long-term
encourage focus on the longer-term
growth of the business, however,
position.
annual targets can encourage short-
term strategies rather than
maximising shareholder wealth.
The chairman has sole responsibility All members of the board should be
for liaising with the shareholders and involved in ensuring that satisfactory
answering any of their questions. dialogue takes place with
shareholders, for example, all should
attend meetings with shareholders
However, this is a role which the such as the annual general meeting.
board as a whole should
The board should state in the annual
undertake. report the steps they have taken to
ensure that the members of the
board, and in particular the non-
executive directors, develop an
understanding of the views