Microsoft Word Audit Quality-Framework Final vs 20140214
Interactions between Management and Regulators
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- Interactions between Management and Financial Statement Users
| Interactions between Management and Regulators 73. The extent to which financial regulators interact with management in relation to financial reporting varies between countries and industry sectors. Some financial regulators establish and enforce the 13 In an international context, the activities of the International Forum of Independent Audit Regulators (IFIAR) facilitate knowledge sharing and promote greater coordination among audit regulators. The IFIAR Core Principles for Independent Audit Regulators include that “the Principles are intended to support cooperation between regulators and promote greater consistency of audit oversight.” Further information about its activities can be found on its website: www.ifiar.org 24 financial reporting frameworks and may raise questions with management about aspects of the financial statements. This in turn, may cause management to raise issues with the auditor, which may impact audit quality in future years. Furthermore, in some sectors such as banking, prudential regulators may undertake direct supervisory activities that involve interaction with management. The auditor obtains an understanding of these interactions as they are a source of relevant information and perceptions. 4.7 Interactions between Management and Financial Statement Users 74. Aside from issuing the financial statements themselves, management may interact with users, particularly investors, in a number of other ways, including through issuing press releases announcing significant transactions or events, and holding analyst briefings and other meetings with investors. Interactions between management and users provide opportunities to enhance the users’ understanding of the financial statements. In addition, two-way interactions such as meetings between management and investors may provide an added motivation for management to achieve high-quality financial reporting. 75. More generally, users, such as institutional investors, can reinforce the importance of audit quality by taking an active interest in exploring with management matters on which the auditor has taken a public position – such as by modifying the audit opinion or issuing a statement to shareholders explaining relevant matters. 4.8 Download 1.81 Mb. Share with your friends:
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