ACCA Strategic Professional · Advanced Audit and Assurance (International) · Reports to those charged with governance and management
At the end of the audit of Orion Logistics, the auditor discussed with the audit committee a significant related-party transaction that management had not disclosed fully. Management later corrected the disclosure. The audit manager wishes to rely on the oral discussion only. Under ISA 260, which statement is most accurate?
Written communication is required for significant findings where, in the auditor's judgment, oral communication would not be adequate. Where matters are communicated orally, the auditor documents them and management's or TCWG's response. It is not required for every trivial matter or only when the opinion is modified.
- AOral communication is always sufficient for every matter, as ISA 260 prefers it
- BWritten communication is required for all matters, including trivial ones
- CWritten communication is required only if the matter results in a modified opinion
- DWritten communication is required for significant findings from the audit if, in the auditor's judgment, oral communication would not be adequate; and if oral, the auditor documents it and how it was responded toCorrect
Explanation
ISA 260 requires written communication of significant findings where oral communication would not be adequate, and the auditor must document oral communications and any response. Written communication is not required for every matter, nor tied only to modified opinions. Significant findings include qualitative aspects of practices, significant difficulties and matters affecting the report, such as undisclosed related-party issues.
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