Required Communications with Those in Charge of Governance

Question 1

Who are those charged with governance?

Answer 1

People responsible for strategic decision and obligations of accountability of the entity including overseeing the financial reporting process.

Question 2

What is the auditors responsibility to communicating the responsibilities of those charged with governance?

Answer 2

Must communicate those matters that are SIGNIFICANT and RELEVANT to the responsibilities of those charged with governance and overseeing the financial reporting process

Question 3

What matters would not be appropriate with management?

Answer 3

Integrity of management

Competence of management

Question 4

What are the four categories of communication with management of a company?

Answer 4

1) Management responsibility
2) Auditors responsibilities under GAAS
3) Planned Scope & timing of the audit (with emphasis on audit strategy)
4) Significant findings from the audit

Question 5

What do we mean by significant finds from the audit? (Tested)

Answer 5

• Significant issues discussed with management in connect with the auditor’s retention or appointment
• Independence issues
• Qualitative aspects of accounting policies (quality of the financial statements, are they conservative or aggressive)
• Significant difficulties encountered during the audit (cooperation from management, challenges in meeting deadlines)
• Disagreements with management over accounting and auditing issues, even if they were resolved.
• Management consultations with other accountants to get a second opinion.
• Any uncorrected misstatements identified by auditor