Page 34 - CA Final Audit Titanium Full Book. (With Cover Pages)

CA Ravi Taori
Lack of SAAE: In cases where sufficient information cannot be acquired, the auditor should determine the
impact of lack of sufficient appropriate audit evidence on their opinion.
Implications of Non-Compliance: The auditor should consider the implications of non-compliance on other
audit facets, such as risk assessment and reliability of written representations, and act accordingly.

(CNO-SA250.160) Reporting Non-Compliance to Those Charged with Governance.
Identify and communicate: The auditor has a responsibility to identify and communicate non-compliance with
laws and regulations during the audit, except when matters are clearly inconsequential.
Intentional and material: If the auditor believes that the non-compliance is intentional and material, this
should be communicated to those charged with governance as promptly as possible.
Involvement of Mgt & TCWG: When the auditor suspects involvement of management or those charged with
governance in non-compliance, it should be communicated to the next higher level of authority in the entity.
No Higher Authority: If no higher authority exists, or the auditor believes the communication may not be acted
upon, or is unsure who to report to, the auditor should consider obtaining legal advice.

(CNO-SA250.180) Reporting non-compliance in the auditor’s report on the financial statements.
Qualified or adverse opinion: If an auditor identifies non-compliance that materially affects the financial
statements, and this isn't adequately represented in those statements, they are obligated to express a qualified or
adverse opinion, following the guidelines of SA 705.
Qualified or disclaimer Opinion: In the event that management or TCWG obstructs the auditor from
obtaining necessary evidence to evaluate potential material non-compliance, the auditor will express a qualified
opinion or disclaimer of opinion based on this scope limitation, in line with SA 705.
Limitation (External Circumstances): If an auditor cannot ascertain whether non-compliance has occurred due
to limitations brought about by external circumstances rather than management or TCWG, the auditor should
assess the impact on their opinion according to SA 705.

(CNO-SA250.200) Reporting non-compliance to regulatory and enforcement authorities
If an auditor detects or suspects legal non-compliance, they must ascertain if they are obligated to report it to
external parties.

(CNO-SA250.220) Documentation
The auditor should record any suspected legal non-compliance and the outcomes of related discussions with
management, governance, and external parties.

SA 260

COMMUNICATION WITH THOSE CHARGED WITH GOVERNANCE

(CNO-SA260.020) Who are “Those charged with governance”? (TCWG)
SA 260 deals with the auditor’s responsibility to communicate with those charged with governance in an audit
of financial statements.
1. Definition: "Those charged with governance" refer to individuals or organizations responsible for overseeing
the entity's strategic direction and obligations, including the financial reporting process. They could be part of
the management, for example, executive members of a governance board or an owner-manager.
2A. Different Governance Structures: Governance structures differ due to influences such as cultural and legal
backgrounds, size, and ownership characteristics. They could range from a single board handling both

www.auditguru.in 2.14