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Audit of Financial Statements and Internal Control

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Questions and Answers

What factors may be relevant to the timing of communications between an auditor and those charged with governance?

The color of the entity's logo and the auditor's office location
The weather conditions at the time of the audit and the auditor's favorite TV show
The auditor's preferred communication method and the entity's social media presence
The size and legal structure of the entity being audited (correct)

In what scenario should an auditor communicate significant difficulties encountered during the audit?

When they want to show off their audit skills
When they are bored during the audit
When they anticipate a modified opinion or if those charged with governance can assist in overcoming the difficulties (correct)
When they need advice for personal matters

What is one aspect an auditor should take into consideration regarding the entity being audited?

The number of vacations taken by the auditing team
The distance between the auditor's office and the entity's location
The control environment and legal structure (correct)
The auditor's favorite food and music taste

Why is two-way communication between the auditor and those charged with governance considered important?

To ensure effective communication for the purpose of the audit (A) Signup and view all the answers

When should an auditor communicate a material weakness identified during the audit?

Timely to enable appropriate remedial action (D) Signup and view all the answers

What should an auditor evaluate regarding communication between them and those charged with governance?

Whether two-way communication has been adequate for the purpose of the audit (D) Signup and view all the answers

Why does effective two-way communication benefit both auditors and those charged with governance?

It assists in fulfilling audit objectives and expectations of governance (B) Signup and view all the answers

What factors may influence the form of communication an auditor chooses to use?

The legal or regulatory requirements (C) Signup and view all the answers

In the context of auditor communication, what could be a reason for choosing formal presentations over less formal communications?

Significance of the matter being communicated (C) Signup and view all the answers

When deciding on the extent of detail to include in a communication, what is a relevant factor for an auditor to consider?

Whether the matter has been satisfactorily resolved (B) Signup and view all the answers

What aspect may affect whether an auditor chooses to communicate orally or in writing?

Whether management has communicated the matter before (B) Signup and view all the answers

In what situation would an auditor be more likely to use a formal communication style?

When there are significant changes in the governing body (D) Signup and view all the answers

What is a factor that may lead an auditor to communicate more informally?

Regular scheduled meetings with those charged with governance (B) Signup and view all the answers

Why might an auditor choose to communicate orally rather than in writing?

When the matter has already been fully resolved (C) Signup and view all the answers

Which factor could potentially lead an auditor to use more detailed written communications?

Significant changes in management personnel (B) Signup and view all the answers

What is a common reason for an auditor to communicate orally in a less formal manner?

High level of ongoing contact with those charged with governance (B) Signup and view all the answers

Why might an engagement letter be considered an important form of communication from an auditor?

As a way to inform those charged with governance of audit findings and terms of engagement (A) Signup and view all the answers

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