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CA Ravi Taori

QNO— Significance of 2 Way Communication between Auditor & TCWG New Course – (SM25)
260.50 Bhaskar CNO - SA260.040
In what ways an effective two-way communication between auditor and those charged with governance
is important?
Answer Communication from the auditor is important with those charged with governance. An effective two-way
communication is important in assisting following.

• Constructive working relationship: the auditor and those charged with governance in
understanding matters related to the audit in context, and in developing a constructive working
relationship. This relationship is developed while maintaining the auditor's independence and
objectivity.
• Obtaining Information Relevant to the Audit: The auditor in obtaining from those charged with
governance information relevant to the audit. For example, those charged with governance may
assist the auditor in understanding the entity and its environment, in identifying appropriate
sources of audit evidence, and in providing information about specific transactions or events.
• Help TCWG with Oversight of Financial Reporting Process: Those charged with governance in
fulfilling their responsibility to oversee the financial reporting process, thereby reducing the risks
of material misstatement of the financial statements.
• Evaluate two-way communication: The auditor shall evaluate whether the two-way
communication between the auditor and those charged with governance has been adequate for
the purpose of the audit. If it has not, the auditor shall evaluate the effect, if any, on the auditor’s
assessment of the risks of material misstatement and ability to obtain sufficient appropriate audit
evidence and shall take appropriate action.

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