Microsoft Word Audit Quality-Framework Final vs 20140214
Interactions between Auditors and Those Charged with Governance
Download 1.81 Mb. View original pdf
|
| Interactions between Auditors and Those Charged with Governance 53. Those charged with governance are responsible for overseeing the strategic direction of the entity and its obligations related to accountability. This includes overseeing the entity’s financial reporting process. In listed companies and other large entities, much of the work related to overseeing the entity’s financial reporting process is often undertaken by an audit committee. 54. Effective two-way communication with auditors can assist those charged with governance in fulfilling these responsibilities. In particular, those charged with governance may benefit from the auditor’s views on such matters as the financial reporting risks faced by the entity, the main areas 11 In many smaller entities there is little distinction between management and those charged with governance. An owner-manager will usually fulfill both roles. 21 of management judgment in the financial statements, and insights into the quality of the entity’s financial reporting process including weaknesses in its internal financial controls. This information can assist those charged with governance to conclude on the fair presentation of the financial statements, especially if the auditor has concerns which have not been acted upon by management. 55. The auditor is required to communicate with those charged with governance (including the audit committee where one exists) about planning matters and the significant findings. Sometimes, effective communication is facilitated if at least one meeting, or part of a meeting, takes place without management in attendance. For smaller entities communication between the auditor and those charged with governance is often likely to be more frequent and less formal. 56. Those charged with governance are also in a position to influence the quality of the audit through: Providing views on financial reporting risks and areas of the business that warrant particular audit attention; Considering whether sufficient audit resources will be allocated for the audit to be effectively performed and that the audit fee fairly reflects this; Considering independence issues and assessing their resolution; Assessing how management was challenged by the auditor during the audit, particularly with respect to the assessment of fraud risk, management’s estimates and assumptions, and the choices of accounting policies; and Creating an environment in which management is not resistant to being challenged by the auditors and is not overly defensive when discussing difficult or contentious matters. 4.3 Download 1.81 Mb. Share with your friends:
|