Page 35 - CA Final Audit Titanium Full Book. (With Cover Pages)

CA Ravi Taori
supervisory and executive functions to separate boards for each function, or even to a sole owner-manager in
smaller entities.
2B. Governing Bodies: In most cases, governance is the shared responsibility of a governing body like a board
of directors, a supervisory board, partners, a committee of management, trustees, or equivalent persons.
3. Auditor Communication: The auditor, in the course of their duties, may need to communicate specific
matters with those charged with governance. However, the appropriate persons for such communication may
not always be clearly identifiable from the legal framework or other circumstances.
4. Governance Structure Unclear: When the governance structure is unclear, such as in some family-owned
entities and non-profits, the auditor may need to discuss and agree with the engaging party on the appropriate
persons for communication, guided by their understanding of the entity’s governance structure and processes.

(CNO-SA260.040) Significance of Communication with Those charged with governance
Constructive Relationship: Effective communication aids in developing a constructive relationship between
the auditor and those charged with governance, preserving auditor's independence and objectivity.
Relevant Audit Information: Auditor acquires relevant audit information from those charged with governance,
aiding in understanding the entity, identifying audit evidence sources, and gathering specific transaction details.
Fulfilling Oversight responsibilities: Communication helps those charged with governance in fulfilling their
oversight responsibilities, reducing material misstatement risks in financial statements.

(CNO-SA260.060) Objectives of Auditor in Accordance with SA 260
1A. Identifying TCWG: Determine the appropriate person(s) in the governance structure for communication.
1B. Two-way communication: Promote two-way communication channel between the auditor and TCWG.
2A. Auditor's responsibilities: Clearly communicate the auditor's responsibilities, planned scope, and timeline
to TCWG.
2B. Relevant audit information: Obtain relevant audit information from TCWG.
2C. Significant audit findings: Timely provide significant audit findings to TCWG for effective oversight of
financial reporting.

(CNO-SA260.080) Matters to be Communicated by the Auditor
Following matters are required to be communicated by auditor with those charged with governance:
The auditor’s responsibilities in relation to the financial statement audit (After Appointment)
Form & Express Opinion: The auditor's responsibility is to form and express an opinion on the financial
statements, which are prepared by the entity's management & TCWG.
Mgt & TCWG Not Relived: Despite the financial statement audit, management and TCWG are not relived of
their own responsibilities.
Engagement Letter: The auditor's responsibilities are often detailed in the engagement letter or another
appropriate written agreement agreed with TCWG.

(CNO-SA260.100) Planned scope and timing of the audit (Just before starting Audit)
1A. Overview of planned scope and timing: The auditor shall communicate an overview of planned scope and
timing, including significant risks.
1B. Don’t Compromise with Effectiveness: Care in communicating planned scope and timing is necessary, so
as not to compromise the audit's effectiveness, especially if those charged with governance are involved in
managing the entity.
1C. Sole Responsibility of Auditor: While communication assists in planning, the sole responsibility for the
overall audit strategy, audit plan, nature, timing, and extent of procedures lies with the auditor.

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