ACCA Strategic Professional · Advanced Audit and Assurance (International) · Reports to those charged with governance and management
Auditor Priya has identified several deficiencies at Altair Components. Some are significant and some are minor, and the minor ones were already reported to management in the prior year and remain uncorrected. Which statement about communication under ISA 265 is correct?
Significant deficiencies must be communicated in writing to those charged with governance, while other deficiencies deserving management's attention are communicated to management at an appropriate level, orally or in writing. Not every minor deficiency goes to governance, and misstatement is not a prerequisite.
- ASignificant deficiencies go in writing to those charged with governance, and other deficiencies that merit management's attention are communicated to management, in writing or orallyCorrect
- BAll deficiencies, however minor, must be reported in writing to those charged with governance
- COnly deficiencies that caused a material misstatement need to be communicated
- DDeficiencies communicated in a prior year must never be mentioned again
Explanation
ISA 265 requires written communication of significant deficiencies to those charged with governance, and communication to management at an appropriate level of other deficiencies that merit attention, which may be oral. Repetition is not prohibited, and minor items need not all go to governance.
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