Auditor Required Communications with Audit Committees

Auditor Required Communications with Audit Committees

The guidance covering these requirements is located in the following sections of the revised AICPA Auditing Standards (SAS) Codification – Post Clarity (subsequent to the Clarity Project):

  • AU-C Section 260, “The Auditor’s Communication with Those Charged With Governance”
  • AU-C Section 240, “Consideration of Fraud in a Financial Statement Audit”
  • AU-C Section 250, “Consideration of Laws and Regulations in an Audit of Financial Statements”
  • AU-C Section 265, “Communicating Internal Control Related Matters Identified in an Audit”

Communications for All Audits

  • An overview of planned scope and timing of audit
  • Auditor responsibility under generally accepted auditing standards (GAAS)
  • Methods of accounting for significant unusual transactions and effects of policies in controversial or emerging areas (e.g., revenue recognition; off-balance sheet financing; and accounting for equity investments)
  • Management judgments and accounting estimates
  • Auditors’ judgment about the quality of the organization’s accounting principles
  • Adoption of or change in an accounting principle
  • Material, corrected misstatements brought to the attention of management by the auditors
  • Unrecorded misstatements, other than those the auditors believe to be trivial
  • Other information in documents containing audited financial statements (e.g., annual reports)
  • Disagreements with management
  • Consultation with other accountants
  • Major issues discussed with management prior to retention (initial or recurring)
  • Significant issues discussed with management (i.e., operational considerations/and plans and strategies)
  • Significant difficulties encountered during the audit
  • Fraud and illegal acts
  • Representations requested from management
  • Other issues arising from the audit that the auditors consider significant and relevant to those charged with governance
  • Significant deficiencies and material weaknesses identified during the audit
  • Independence


UP NEXT: Strengthening Governance: Effective Mechanisms for Reporting, Investigating and Remediating Fraud

GO BACK: Effective Audit Committee Guide