(ii) General audit matters that might be communicated to those charged with governance are addressed in ISA 260:
(1) The auditor’s responsibilities in relation to financial statement audit.
This would include:
– A statement that the auditor is responsible for forming and expressing an opinion on the financial statements.
– That the auditor’s work is carried out in accordance with ISAs and in accordance with local laws and regulations.
(2) Planned scope and timing of the audit.
This would include
– The audit approach to assessing the risk of serious misstatement, whether arising from fraud or error.
– The audit approach to the internal control system and whether reliance will be placed on it.
– The timing of interim and final audits, including reporting deadlines.
(3) Significant findings from the audit.
This heading could include:
– Significant difficulties encountered during the audit, including delays in obtaining information from management.
– Material weaknesses in internal control and recommendations for improvement.
– Audit adjustments, whether or not recorded by the entity, that have, or could have, a material effect on the entity’s financial statements. For example, the bankruptcy of a material receivable shortly after the year-end that should result in an adjusting entry.
(4) A statement on independence issues affecting the audit.
This would include:
– That the audit firm has ensured that all members of the audit team have complied with the ethical standards of ACCA.
– That appropriate safeguards are in place where a potential threat to independence has been identified.
(Tutorial note: The lists of examples listed under the above headings are not exhaustive and in practice many more specific matters would be communicated to those charged with governance such as:
– Modifications to the audit report.
– Any management representation points requested.
– Cases of suspected/actual fraud.)
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