ACCA Strategic Professional · Advanced Audit and Assurance (International) · Reports to those charged with governance and management
During the audit of Oriel Pharma, the auditor identifies a significant deficiency in access controls over the general ledger. The finance director asks the auditor not to put this in writing, saying it will be fixed next month. What should the auditor do under ISA 265?
The auditor must still communicate the significant deficiency in writing to those charged with governance. A management request to withhold it or a promise to fix it later does not remove the ISA 265 requirement. Oral-only reporting is inadequate and regulator reporting is not the default.
- AAgree, as the deficiency will soon be corrected
- BCommunicate only orally, recording the conversation in the working papers
- CCommunicate in writing to those charged with governance regardless, as the requirement is not removed by planned remediationCorrect
- DReport it directly to the regulator immediately
Explanation
The requirement for written communication of significant deficiencies applies once identified during the audit; promised remediation does not remove it. Oral-only communication is insufficient, and reporting directly to a regulator is not an ISA 265 step unless law or ethics require it.
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