a. Steps Required by ISA 250 to Ensure Compliance (9 Marks)

1. Understanding the Legal Framework:
   • Obtain a thorough understanding of the laws and regulations relevant to the company’s operations.
2. Risk Assessment Procedures:
   • Assess the risk of material misstatement due to non-compliance with applicable laws and regulations.
3. Inquiry of Management:
   • Inquire from management and those charged with governance about compliance policies, procedures, and known instances of non-compliance.
4. Inspection of Documents:
   • Examine legal correspondence, board minutes, and regulatory filings for indications of non-compliance.
5. Testing Compliance:
   • Perform substantive and compliance testing of transactions and records to verify adherence to applicable laws.
6. Professional Skepticism:
   • Maintain professional skepticism throughout the audit, considering the possibility of non-compliance that management may not disclose.

b. Procedural Actions in the Event of Material Non-Compliance (6 Marks)

1. Document Findings:
   • Record all instances of identified or suspected non-compliance in the audit working papers, including details of evidence obtained.
2. Communicate with Management:
   • Discuss the non-compliance findings with management and those charged with governance, emphasizing the financial reporting implications.
3. Evaluate the Impact on the Audit Report:
   • Assess whether the non-compliance results in a material misstatement and determine the type of audit opinion (e.g., qualified, adverse) to issue.
4. Report to Authorities:
   • Where required by law, report the non-compliance to relevant regulatory or enforcement authorities, ensuring adherence to confidentiality provisions.