Document ID: chunk:federal_register_of_legislation:F2021C01264:body:0:p5
Version: federal_register_of_legislation:F2021C01264
Segment Type: other
Provision Reference: 
Character Range: 12381–15489

Para. A14, A20‑A21)

(b)                Other deficiencies in internal control identified during the audit that have not been communicated to management by other parties and that, in the auditor's professional judgement, are of sufficient importance to merit management's attention.  (Ref: Para. A22‑A26)

11.               The auditor shall include in the written communication of significant deficiencies in internal control:

(a)                A description of the deficiencies and an explanation of their potential effects; and (Ref: Para. A28)

(b)                Sufficient information to enable those charged with governance and management to understand the context of the communication.  In particular, the auditor shall explain that:  (Ref: Para. A29‑A30)

(i)                 The purpose of the audit was for the auditor to express an opinion on the financial report;

(ii)               The audit included consideration of internal control relevant to the preparation of the financial report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of internal control; or

         Aus 11.1 In circumstances when the auditor has a responsibility to express an opinion on the effectiveness of internal control in conjunction with the audit of the financial report, the auditor shall omit the phrase that the auditor's consideration of internal control is not for the purpose of expressing an opinion on the effectiveness of internal control; and

(iii)             The matters being reported are limited to those deficiencies that the auditor has identified during the audit and that the auditor has concluded are of sufficient importance to merit being reported to those charged with governance.

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Application and Other Explanatory Material

Determination of Whether Deficiencies in Internal Control Have Been Identified (Ref: Para. 7)

A1.             In determining whether the auditor has identified one or more deficiencies in internal control, the auditor may discuss the relevant facts and circumstances of the auditor's findings with the appropriate level of management.  This discussion provides an opportunity for the auditor to alert management on a timely basis to the existence of deficiencies of which management may not have been previously aware.  The level of management with whom it is appropriate to discuss the findings is one that is familiar with the internal control area concerned and that has the authority to take remedial action on any identified deficiencies in internal control.  In some circumstances, it may not be appropriate for the auditor to discuss the auditor's findings directly with management, for example, if the findings appear to call management's integrity or competence into question (see paragraph A20).

A2.             In discussing the facts and circumstances of the auditor's findings with management, the auditor may obtain other relevant information for further consideration, such as:

           * Management's understanding of the actual or