ACCA AA Syllabus A. Audit Framework And Regulation - Communicating with those charged with governance - Notes ^{7 / 7}

Communication takes the form of the letter of engagement and the management letter sent at the beginning and end or the audit respectively.

Ongoing communication should be undertaken throughout the audit.

Those charged with governance are responsible for overseeing:

1. The strategic direction of the entity

2. Obligations related to the accountability of the entity

3. Good corporate governance

4. Risk assessment

   • - the establishment and monitoring of internal controls

   • - compliance with applicable law and regulations

   • - implementation of controls to prevent and detect fraud and errors

What should be communicated?

1. Auditor's responsibility for providing the opinion etc

2. Auditors plan & approach

3. Key risks identified at planning

4. Any significant difficulties or matters arising during the audit

5. Any significant adjustments

6. Any written representations needed

7. Any suspected frauds

8. Any modification to the opinion

9. Compliance with ethical standards

Expectations Gap

In order to avoid an ‘expectation gap’ the auditor should ensure that management are aware that the external auditor is not responsible for:

1. The preparation of the financial statements

2. Selection of accounting policies

3. Implementing or ensuring good standards of corporate governance

4. Systems and controls implementation