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ACCA Strategic Professional · Advanced Audit and Assurance (International) · Reports to those charged with governance and management

During the audit of Karlow Retail Ltd, the audit team identifies a deficiency in internal control that, in the auditor's professional judgement, is of sufficient importance to merit the attention of those charged with governance. Under ISA 265, how must the auditor communicate this deficiency?

Significant deficiencies in internal control must be communicated in writing to those charged with governance on a timely basis. ISA 265 requires written communication for these matters, so oral-only communication is inadequate, and the audit report is not used to communicate them.

  1. AOrally at the next board meeting, with no written record required
  2. BIn writing, on a timely basis, to those charged with governanceCorrect
  3. COnly to management, because governance bodies do not receive control matters
  4. DIn the auditor's report on the financial statements

Explanation

ISA 265 requires significant deficiencies to be communicated in writing to those charged with governance on a timely basis. Oral communication alone is not sufficient for significant deficiencies. The auditor's report is not the vehicle for this communication.

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