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

Orion Logistics' auditor drafts a management letter containing the following points. Which point is most appropriate to include under ISA 265 content requirements?

The letter should describe each deficiency and explain its potential effects. It should not claim to list all deficiencies, because the audit was not designed to identify them all, nor should it design remediation or invite unrestricted third party use.

  1. AA description of the deficiency together with an explanation of its potential effectsCorrect
  2. BA statement that the letter lists all control deficiencies that exist in the entity
  3. CA statement that the auditor has designed the entity's remediation plan
  4. DA statement that the letter can be provided to any third party without restriction

Explanation

ISA 265 requires the written communication to describe the deficiencies and explain their potential effects. It should also state that the purpose of the audit was to express an opinion, so the auditor's consideration of controls was not designed to identify all deficiencies. The letter is for management and those charged with governance, and use by third parties should be restricted.

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