Topics: Auditing, Financial audit, Governance Pages: 24 (7577 words) Published: July 22, 2013
Charnai Frazier- Holley
Advance Auditing
ACCT 5113
Term Paper
March 22, 2013
Appendix 1: Specific Requirements in ISQC 1 and Other ISAs that Refer to Communications with Those Charged with Governance Appendix 2: Qualitative Aspects of Accounting Practices
∗ Conforming amendments to this ISA as a result of ISA 610 (Revised), Using the Work of Internal Auditors, will be effective for audits of financial statements for periods ending on or after December 15, 2013. COMMUNICATION WITH THOSE CHARGED WITH GOVERNANCE

215 ISA 260
International Standard on Auditing (ISA) 260, Communication with Those Charged with Governance, should be read in conjunction with ISA 200, Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with International Standards on Auditing. COMMUNICATION WITH THOSE CHARGED WITH GOVERNANCE

ISA 260 216
Scope of this ISA
1. This International Standard on Auditing (ISA) deals with the auditor’s responsibility to communicate with those charged with governance in an audit of financial statements. Although this ISA applies irrespective of an entity’s governance structure or size, particular considerations apply where all of those charged with governance are involved in managing an entity, and for listed entities. This ISA does not establish requirements regarding the auditor’s communication with an entity’s management or owners unless they are also charged with a governance role. 2. This ISA is written in the context of an audit of financial statements, but may also be applicable, adapted as necessary in the circumstances, to audits of other historical financial information when those charged with governance have a responsibility to oversee the preparation of the other historical financial information. 3. Recognizing the importance of effective two-way communication in an audit of financial statements, this ISA provides an overarching framework for the auditor’s communication with those charged with governance, and identifies some specific matters to be communicated with them. Additional matters to be communicated, which complement the requirements of this ISA, are identified in other ISAs (see Appendix 1). In addition, ISA 2651 establishes specific requirements regarding the communication of significant deficiencies in internal control the auditor has identified during the audit to those charged with governance. Further matters, not required by this or other ISAs, may be required to be communicated by law or regulation, by agreement with the entity, or by additional requirements applicable to the engagement, for example, the standards of a national professional accountancy body. Nothing in this ISA precludes the auditor from communicating any other matters to those charged with governance. (Ref: Para. A24-A27) The Role of Communication

4. This ISA focuses primarily on communications from the auditor to those charged with governance. Nevertheless, effective two-way communication is important in assisting: (a) The auditor and those charged with governance in understanding matters related to the audit in context, and in developing a constructive working relationship. This relationship is developed while maintaining the auditor’s independence and objectivity; 1 ISA 265, Communicating Deficiencies in Internal Control to Those Charged with Governance and Management COMMUNICATION WITH THOSE CHARGED WITH GOVERNANCE

217 ISA 260
(b) The auditor in obtaining from those charged with governance information relevant to the audit. For example, those charged with governance may assist the auditor in understanding the entity and its environment, in identifying appropriate sources of audit evidence, and in providing information about specific transactions or events; and (c) Those charged with governance in fulfilling their responsibility to oversee the financial...
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