ACCA Strategic Professional · Advanced Audit and Assurance (International) · Reports to those charged with governance and management
Marlow Engineering is a private company with an owner-manager who is also the sole director and the only person charged with governance. The auditor has identified matters that ISA 260 would require to be communicated to TCWG. What is the auditor's obligation?
If all those charged with governance are also involved in managing the entity, such as a sole owner-manager, matters communicated to them in their management capacity need not be repeated in their governance capacity, provided the auditor is satisfied they are adequately informed about governance matters.
- AThe matters need not be communicated, because the owner-manager already knows them as manager
- BThe matters must be communicated to the shareholders' general meeting instead
- CThe auditor need not communicate again, provided the matters have been communicated to the owner-manager in their management capacity and that person has full responsibility for governanceCorrect
- DThe matters must be communicated to an independent non-executive appointed by the auditor
Explanation
ISA 260 recognises that where all those charged with governance are involved in managing the entity, matters communicated to them in their management role need not be communicated again in their governance role, provided they are adequately informed. The auditor must be satisfied this is so. The other options invent requirements not found in the standard.
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