Those charged with governance – The person(s) or organization(s) (e.g., a corporate trustee) with responsibility for overseeing the strategic direction of the entity and obligations related to the accountability of the entity.
Management – The person(s) with executive responsibility for the conduct of the entity’s operations.
Those Charged with Governance
When the auditor is required to communicate some important findings within entity so he will have to determine an appropriate level of authority within the governance structure of entity to whom the relevant matter is to be communicated.
Before communicating the matter with TCWG the may also communicate with subgroup of TCWG (e.g. Audit committee) in such a case the auditor will determine whether communication is required with governing body.
In small business the entity is owned managed and control by single person he is the manager of that entity. TCWG consist of only that single person.in such a case if communication is required, will be communicated with that person in the context of management and the in the context of TCWG.
Matters to Be Communicated (ISA-260)
1)The Auditor’s Responsibilities in Relation to the Financial Statement Audit
The auditor shall communicate with those charged with governance the responsibilities of the auditor in relation to the financial statement audit, including that:
- The auditor is responsible for forming and expressing an opinion on the financial statements that have been prepared by management with the oversight of those charged with governance; and
- The audit of the financial statements does not relieve management or those charged with governance of their responsibilities
2)Planned Scope and Timing of the Audi
The auditor shall communicate the scope and timing of audit which has planned by him. This communication shall include the significant risk identified by the auditor.
3)Significant Findings from the Audit (As per ISA-260)
The auditor shall communicate with those charged with governance:
i)The auditor’s views about significant qualitative aspects of the entity’s accounting practices, including accounting policies, accounting estimates and financial statement disclosures.
- ii) Significant difficulties, if any, encountered during the audit;
iii) Unless all of those charged with governance are involved in managing the entity:
- Significant matters arising during the audit that were discussed, or subject to correspondence, with management
- Written representations the auditor is requesting;
- iv) Circumstances that affect the form and content of the auditor’s report, if any; and
- v) Any other significant matters arising during the audit that, in the auditor’s professional judgment
The Communication Process
- The form, timing and contents of communication shall be communicated with TCWG.
- The communication shall be made in written form. And this communication shall be required on timely basis.
- The auditor shall evaluate the adequacy of communication between auditor and TCWG for the purpose of audit.
In case of written communication, the auditor shall retain a copy of that communication as a part of audit documentation. But in case of oral communication the auditor shall include that matter in audit documentation.