ACCA Strategic Professional · Advanced Audit and Assurance (International) · Reports to those charged with governance and management
Brindle Logistics' auditor drafts a written communication of significant deficiencies to those charged with governance. Which content is required by ISA 265 and would be appropriate in the letter?
The letter should describe the significant deficiencies and their potential effects and state that the audit was for expressing an opinion, not for identifying all control deficiencies, so the communication is limited to matters noted. It must not guarantee completeness or involve the auditor in fixing controls.
- AA statement that the audit was designed to express an opinion and not to identify all deficiencies, plus a description of the deficiencies and their potential effectsCorrect
- BA guarantee that all control deficiencies in the entity have been identified
- CDetailed remediation work the auditor will perform to fix the controls
- DA statement that the deficiencies are the responsibility of the audit firm to correct
Explanation
ISA 265 requires the auditor to explain that the audit purpose was to express an opinion, that it did not cover all deficiencies, and that the communication is limited to those identified; it also requires a description of the deficiencies and their potential effects. Guarantees or auditor-led remediation would impair independence and misstate the scope.
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