ACCA AA Syllabus C. Internal Control - The need for auditors to communicate with TCWG - Notes ^{3 / 3}

Those charged with governance (TCWG) are basically those responsible for running the company - those responsible for good corporate governance too therefore

Why communicate with TCWG?

• Help build a working relationship between each other

• Help the Auditor get information about specific transactions etc

• Help TCWG oversee the FR process, which is their responsibility

Objectives of the Auditor

1. To communicate clearly with TCWG the responsibilities of the auditor in relation to the financial statement audit, and an overview of the planned scope and timing of the audit

2. To obtain from TCWG information relevant to the audit;

3. To provideTCWG with timely observations arising from the audit that are significant and relevant to their responsibility to oversee the financial reporting process

4. To promote effective two-way communication between the auditor and those charged with governance.

Communication with Shareholders

• Board is responsible for ensuring satisfactory dialogue with shareholders

• The AGM should be used to encourage communication with investors

Auditors Reporting Responsibilities

• Review and report on system of internal control.

• Report on whether Audit Committee review and monitor internal control system

The external auditor is also required by ISA 260 Communication of audit matters to those charged with governance to provide management periodically with observations arising from the audit that are significant and relevant to management’s responsibility to oversee the financial reporting process.

These observations might include:

• Weaknesses in internal control

• Inappropriate accounting policies