Forms of CommunicationsForms of Communications

Forms of Communications

25 The auditor’s communications with those charged with governance may be made orally or in writing. Ordinarily, the auditor’s decision whether to communicate orally or in writing is affected by factors such as the following:

• The size, operating structure, legal structure, and communications processes of the entity being audited.
• The nature, sensitivity and significance of the audit matters of governance interest to be communicated.
• The arrangements made with respect to periodic meetings or reporting of audit matters of governance interest.
• The amount of on-going contact and dialogue the auditor has with those charged with governance.

26 When audit matters of governance interest are communicated orally, under ASA 230 Audit Documentation, the auditor needs to document in the audit working papers the matters communicated and any responses to those matters. This documentation may take the form of a copy of the minutes of the auditor’s discussion with those charged with governance. In certain circumstances, depending on the nature, sensitivity, and significance of the matter, it may be advisable for the auditor to confirm in writing with those charged with governance any oral communications on audit matters of governance interest.

27 Audit matters of governance interest are ordinarily reported in writing to the governing body or audit committee. The auditor ordinarily considers:

(a) attending a meeting of the governing body or audit committee, when all members are present, to discuss such matters as appropriate; and

(b) any guidelines established by the governing body for reporting issues to, for example, an audit committee, or individuals with particular responsibility for audit issues.

28 If the auditor is concerned that a written report intended for those charged with governance has not been, or may not be distributed to all members of that group, the auditor shall implement an approach whereby all members are appropriately informed of the contents of the report.

29 For example, when reporting to a particular group such as the governing body or audit committee, the auditor ordinarily considers the composition, structure and operational style of that group.

30 Ordinarily, the auditor initially discusses audit matters of governance interest with management, except where those matters relate to questions of management competence or integrity. These initial discussions with management are important in order to clarify facts and issues, and to give management an opportunity to provide further information. If management agrees to communicate a matter of governance interest with those charged with governance, the auditor may not need to repeat the communications, provided that the auditor is satisfied that such communications have effectively and appropriately been made.