Author: Yovan Alfredo Saavedra Cabrejo
International Standard on Auditing 260 states that the auditor must maintain constant communication with the entity’s governance in relation to the audit being conducted; as well as, to report and make available all the findings and observations that arise as a result of it. The ISA in question summarizes the following:
This ISA focuses primarily on communications from the auditor to those charged with governance. Nevertheless, effective two-way communication is important in assisting:
- The auditor and those charged with governance in understanding matters related to the audit in context, and in developing a constructive working relationship. This relationship is developed while maintaining the auditor’s independence and objectivity;
- The auditor in obtaining from those charged with governance information relevant to the audit. For example, those charged with governance may assist the auditor in understanding the entity and its environment, in identifying appropriate sources of audit evidence, and in providing information about specific transactions or events; and
- Those charged with governance in fulfilling their responsibility to oversee the financial reporting process, thereby reducing the risks of material misstatement of the financial statements.
The objectives of the auditor are: a) To communicate clearly with those charged with governance the responsibilities of the auditor in relation to the financial statement audit, and an overview of the planned scope and timing of the audit; b) To obtain from those charged with governance information relevant to the audit; c) To provide those charged with governance with timely observations arising from the audit that are significant and relevant to their responsibility to oversee the financial reporting process; and d) To promote effective two-way communication between the auditor and those charged with governance.
Among the issues that must be communicated are the following:
- The Auditor’s Responsibilities in Relation to the Financial Statement Audit.
- Planned Scope and Timing of the Audit.
- Significant Findings from the Audit.
- Auditor Independence.
According to ISA 260, it is important to keep in mind that, for an efficient work by the auditor, it is imperative that the auditor maintains assertive communication with the governance of the entity and reports the findings or observations identified in the audit process. It is important to consider that this constant communication is not related to an impairment of independence.
Source:
- https://www.aplicaciones-mcit.gov.co/adjuntos/niif/12%20-%20NIA%20260.pdf
