Interpretation and Application of International Standards on Auditing

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ISA 260 (REVISED AND REDRAFTED) COMMUNICATION WITH THOSE CHARGED WITH GOVERNANCE

ISA 260 (revised and redrafted) deals with the auditor’s responsibility to communicate audit related matters to those charged with governance. The revised and redrafted ISA gives particular focus to two-way communication. The close analysis of the standard that follows helps us have greater understanding on what matters should be significant for those charged with governance; and in particular what the follow-on impact is when there are difficulties.

It is important to understand that this particular standard does not deal with the auditor’s requirements to communicate with an entity’s management or owners unless they have been specifically charged with a governance role. ISA 260 (revised and redrafted) defines ‘those charged with governance’ as:

The person(s) or organisation(s) (for example, a corporate trustee) with responsibility for overseeing the strategic direction of the entity and obligations related to the accountability of the entity. This includes overseeing the financial reporting process. For some entities in some jurisdictions, those charged with governance may include management personnel, for example, executive members of a governance board of a private or public sector entity, or an owner-manager.

[ISA260.10(a)]

ISA 260 then goes on to define ‘management’ as:

The person(s) with executive responsibility for the conduct of the entity’s operations. For some entities in some jurisdictions, ...