10 Questions
What is the purpose of AU Section 380?
To set standards for communication between the auditor and those charged with governance.
In what situations does AU Section 380 establish communication standards?
Regardless of an entity's governance structure or size.
Who are considered 'those charged with governance' as per AU Section 380?
Persons responsible for strategic direction and accountability of the entity.
When does AU Section 380 require communication with an entity's management?
It does not establish requirements for communication with entity management.
Can AU Section 380 be applied to audits of historical financial information?
Yes, if those charged with governance oversee preparation of the financial information.
What responsibilities do 'those charged with governance' have regarding oversight?
Providing strategic direction and ensuring accountability.
Does AU Section 380 apply differently based on the size of an entity?
No, it applies regardless of an entity's size.
'Those charged with governance' are primarily responsible for which aspect of an entity?
Strategic direction and accountability.
'Those charged with governance' can be involved in managing an entity when:
'Those charged with governance' are involved in strategic decision-making.
What type of entities does AU Section 380 apply to?
Entities regardless of their size or governance structure.
Study Notes
Communication with Audit Committee
- Good governance principles suggest that auditors have access to the audit committee as necessary and meet with them without management present at least annually.
- The audit committee chair and other members meet with the auditor periodically.
Evaluating Communication with Subgroups
- Auditors evaluate whether communication with a subgroup of those charged with governance (e.g., audit committee or individual) fulfills their responsibility to communicate with those charged with governance.
- Factors to consider when evaluating communication with subgroups include:
- Respective responsibilities of the subgroup and governing body
- Nature of the matter to be communicated
- Relevant legal or regulatory requirements
- Subgroup's authority to take action and provide further information
- Potential conflicts of interest between subgroup and governing body
- Need to communicate information to the governing body
Communicating with Governance When Involved in Managing the Entity
- When all of those charged with governance are involved in managing the entity, matters communicated to persons with management responsibilities need not be communicated again with those same persons in their governance role.
- The auditor considers whether communication with persons with financial reporting responsibilities adequately informs all of those with whom the auditor would otherwise communicate in their governance capacity.
Matters to Be Communicated
- Auditors communicate with those charged with governance:
- Auditor's responsibilities under generally accepted auditing standards
- Overview of the planned scope and timing of the audit
- Significant findings from the audit
- Management's communication of these matters does not relieve the auditor of the responsibility to also communicate them.
Test your knowledge on the key elements involved in the auditor's communication with the audit committee according to good governance principles. Learn about the access, meetings, and interactions between auditors and audit committees.
Make Your Own Quizzes and Flashcards
Convert your notes into interactive study material.
Get started for free
