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

Marlow & Partners has communicated a significant deficiency in writing to the audit committee of Dunmere Co. At the next year's audit, management has not corrected it, and the auditor finds it still exists. What is the auditor's most appropriate action?

The auditor should repeat or refer again to the uncorrected significant deficiency so that those charged with governance remain aware of it, and should reflect it in the audit approach. Omitting it, withdrawing, or fixing the control personally would be wrong, as remediation is management's responsibility.

  1. AConsider repeating the communication of the uncorrected significant deficiency, or otherwise ensure it is brought again to the attention of those charged with governance, and take account of it in the audit approachCorrect
  2. BOmit it from the new communication, because it was already reported last year
  3. CWithdraw from the engagement immediately because management ignored the advice
  4. DCorrect the control weakness personally to ensure the audit can be completed

Explanation

ISA 265 notes that where a significant deficiency has been previously communicated but not remedied, the auditor may repeat the communication or otherwise refer to the earlier communication. The auditor also reflects it in the risk assessment and responses. Withdrawal is not required, and fixing the control would be a management responsibility and a self-review threat.

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