Saturday, October 13, 2012

Internaitonal Standard on Auditing: Communication with those charged with governance

International Standard on Auditing ("ISA") 260 deals with the "Communication with those charged with governance".

For the purpsoe of ISA 260, the standard has defined the following:

10. For purposes of the ISAs, the following terms have the meanings attributed below:

(a) Those charged with governance – The person(s) or organization(s) (for

example, a corporate trustee) with responsibility for overseeing the

strategic direction of the entity and obligations related to the

accountability of the entity. This includes overseeing the financial

reporting process. For some entities in some jurisdictions, those charged

with governance may include management personnel, for example,

executive members of a governance board of a private or public sector

entity, or an owner-manager. For discussion of the diversity of

governance structures, see paragraphs A1-A8.

(b) Management – The person(s) with executive responsibility for the conduct

of the entity’s operations. For some entities in some jurisdictions,

management includes some or all of those charged with governance, for

example, executive members of a governance board, or an owner-manager.   ISA 260 has stated the matters required to be communicated to those charged with governance, as below: - Auditor's responsbilities in relation to the financial statement audit; - planned scope and timing of the audit; - significant findings from the audit; - Auditor independence   This is a very important auditing standard, whereby all the audit team members, especially audit executive need to master. This standard clearly defines on the audit matters to be communicated, to whom to be communicated, and the communication process. Hence, we suggest all audit executives to read through this ISA 260 to ensure that the audit team has complied with the standard.

No comments: