Document ID: chunk:federal_register_of_legislation:F2023C01128:reg:17:p9
Version: federal_register_of_legislation:F2023C01128
Segment Type: reg
Provision Reference: reg 17 (pt 9/25)
Character Range: 30828–33901

full or in summary form, with the governing body, the auditor may be influenced by the auditor's assessment of how effectively and appropriately the subgroup communicates relevant information with the governing body.  The auditor may make explicit in agreeing the terms of engagement that, unless prohibited by law or regulation, the auditor retains the right to communicate directly with the governing body.

A7.             Audit committees (or similar subgroups with different names) exist in many jurisdictions.  Although their specific authority and functions may differ, communication with the audit committee, where one exists, has become a key element in the auditor's communication with those charged with governance.  Good governance principles suggest that:

           * The auditor will be invited to regularly attend meetings of the audit committee.

           * The chair of the audit committee and, when relevant, the other members of the audit committee, will liaise with the auditor periodically.

           * The audit committee will meet the auditor without management present at least annually.

When All of Those Charged with Governance Are Involved in Managing the Entity (Ref: Para. 13)

A8.             In some cases, all of those charged with governance are involved in managing the entity, and the application of communication requirements is modified to recognise this position.  In such cases, communication with person(s) with management responsibilities may not adequately inform all of those with whom the auditor would otherwise communicate in their governance capacity.  For example, in a company where all directors are involved in managing the entity, some of those directors (e.g., one responsible for marketing) may be unaware of significant matters discussed with another director (e.g., one responsible for the preparation of the financial report).

Matters to Be Communicated

The Auditor's Responsibilities in Relation to the Financial Report Audit (Ref: Para. 14)

A9.             The auditor's responsibilities in relation to the financial report audit are often included in the engagement letter or other suitable form of written agreement that records the agreed terms of the engagement.[7]  Law, regulation or the governance structure of the entity may require those charged with governance to agree the terms of the engagement with the auditor.  When this is not the case, providing those charged with governance with a copy of that engagement letter or other suitable form of written agreement may be an appropriate way to communicate with them regarding such matters as:

           * The auditor's responsibility for performing the audit in accordance with Australian Auditing Standards, which is directed towards the expression of an opinion on the financial report.  The matters that Australian Auditing Standards require to be communicated, therefore, include significant matters arising during the audit of the financial report that are relevant to those charged with governance in overseeing the financial reporting