Communication with others under ISA 260

Communication with others under ISA 260

Is communication between Management and Auditors important? 🤔

Why communication between Management and Auditors is important?

(1)   Role of Communication

-         Assist auditor in obtaining relevant audit information

-         obtaining audit evidence based on ISA 500 and ISA 501

(2)   Who are “Those Charged with Governance”?

-         Represent individual/party who are involved in managing the entity. This includes:

(i)               Board of Directors

(ii)              Audit Committee

(iii)             Management Team

(iv)            Other executive

(3)   Matters to be communicated

-         Auditor’s responsibility in the audit engagement

-         Planned scope and timeline of the audit engagement

-         The independence of the audit team that involved in the engagement

-         Significant findings from the audit

(i)               Matters that may significantly affect auditor’s opinion on the financial statements

(ii)              Summary of uncorrected misstatements

(iii)             To identify whether material misstatements are due to error or fraud

(iv)            Audit results which are required to be highlighted to Those Charged with Governance

(4)   The Communication Process

-         Establishing the Communication Process by conveying the forms, timing and the general contents of the communication process.

(i)               Establish communication process

(ii)              Select form of communication

(iii)             Timing

(iv)            Adequacy of communication process

Documentation

When oral communication is used a mode of communication, auditor should

-         Prepare a report on the results of the oral communication

-         request a copy of minutes to ensure there an appropriate record of the oral communication.

-         Any records that are deemed to be appropriate and documented as audit records

Source:

https://mia.org.my/wp-content/uploads/2022/04/MIA_ISA_260_Revised-1.pdf

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