Sa260 communication-with-those-charged-with-governance

Meaning
Scope of SA
Role of communication between TCWG and Auditor
Applicability
Auditor’s responsibilities
Matters to be communicated to TCWG
Objectives
Factors affecting forms of communication
Documentation

1. SA 260 – Communication with those charged with
governance
B.SUMA
2nd year Intern
M/s SBS and Company LLP
[email protected]

by
SBS Hyderabad
1st June 2019
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TCWG
Company
Management
Auditor

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∞Meaning
∞Scope of SA
∞Role of communication between TCWG and Auditor
∞Applicability
∞Auditor’s responsibilities
∞Matters to be communicated to TCWG
∞Objectives
∞Factors affecting forms of communication
∞Documentation


Index

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Those charged with governance Management
Those who supervises, directs and checks the entity. Responsible for day to day functioning of the entity
Super vision group Implementation group
Meaning

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∞Auditor’s responsibility to communicate with those charged with governance in
an Audit of financial statements.
∞Recognising the importance of two way communication in an Audit of financial
statements.
Scope of SA

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Effective two way communication is important in assisting:
∞The Auditor and those charged with governance in understanding matters
related to the Audit in context.
∞The Auditor in obtaining from those charged with governance information
relevant to the Audit.
∞Those charged with governance in fulfilling their responsibility to oversee the
financial reporting process.
∞Law or regulation may restrict the Auditor’s communication of certain matters
with TCWG.

Role of communication between TCWG
and Auditor

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∞Applicable to irrespective of an entity’s governance size or structure.
∞This SA is effective for Audits of financial statements for periods beginning on or
after April 1, 2017.
Applicability

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∞Determine the appropriate person to whom communication can be made.
∞Need to communicate with governing body, if communication is sub group.
∞If Auditor is not satisfied with the response of sub group or he feels it is
appropriate, he may communicate to governing body also.
∞If all the TCWG are involved in managing the entity, the matter need not be
communicated again.
Auditor’s responsibilities

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∞Auditor’s responsibility in relation to financial statement Audit.
∞Planned scope and timing of Audit.
∞Significant findings in Audit with respect to:
Significant quality aspects.
Accounting estimates and accounting policies.
Material weakness in internal controls
Significant difficulties, if any, encountered during the Audit.
Other significant matters.
∞Statement with respect to compliance of ethical requirements regarding
independence in case of listed companies.
∞Circumstances that effect the form and content of the Auditor’s report if any.

Matters to be communicated

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∞Promote two way communication between the Auditor an TCWG.
∞Communicate clearly with TCWG the responsibilities and planning of the Audit.
∞Obtain information from TCWG relevant to Audit.
∞Provide TCWG timely observations arising from the Audit that are significant
and relevant to their responsibility to oversee the financial reporting process.
Objectives

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∞In writing when oral communication is not adequate.
∞On timely basis.
∞Expectations of TCWG including arrangements made for periodic meetings or
communications with the Auditor.
∞Size, operating structure, control environment and legal structure of the entity.
∞In case of an Audit of special purpose financial statements, whether Auditor also
Audits the general purpose financial statements.
∞Evaluate adequacy of communication for the purpose of the Audit.
If not adequate, evaluate its effect on the Auditor’s assessment of risks of
material misstatement.

Factors affecting Communication process

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Following are to be documented by the Auditor:
∞When and to whom they were communicated.
∞Matters communicated in writing.
Documentation

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Thank you!!!
B.SUMA
2
nd
year Intern
M/s SBS and Company LLP
[email protected]

Venue:
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Hyderabad.
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