Document ID: chunk:federal_register_of_legislation:F2021C01264:body:0:p11
Version: federal_register_of_legislation:F2021C01264
Segment Type: other
Provision Reference: 
Character Range: 29791–32858

to merit management's attention.  The determination as to which other deficiencies in internal control merit management's attention is a matter of professional judgement in the circumstances, taking into account the likelihood and potential magnitude of misstatements that may arise in the financial report as a result of those deficiencies.

A23.         The communication of other deficiencies in internal control that merit management's attention need not be in writing but may be oral.  Where the auditor has discussed the facts and circumstances of the auditor's findings with management, the auditor may consider an oral communication of the other deficiencies to have been made to management at the time of these discussions.  Accordingly, a formal communication need not be made subsequently.

A24.         If the auditor has communicated deficiencies in internal control other than significant deficiencies to management in a prior period and management has chosen not to remedy them for cost or other reasons, the auditor need not repeat the communication in the current period.  The auditor is also not required to repeat information about such deficiencies if it has been previously communicated to management by other parties, such as the internal audit function or regulators.  It may, however, be appropriate for the auditor to re‑communicate these other deficiencies if there has been a change of management, or if new information has come to the auditor's attention that alters the prior understanding of the auditor and management regarding the deficiencies.  Nevertheless, the failure of management to remedy other deficiencies in internal control that were previously communicated may become a significant deficiency requiring communication with those charged with governance.  Whether this is the case depends on the auditor's professional judgement in the circumstances.

A25.         In some circumstances, those charged with governance may wish to be made aware of the details of other deficiencies in internal control the auditor has communicated to management, or be briefly informed of the nature of the other deficiencies.  Alternatively, the auditor may consider it appropriate to inform those charged with governance of the communication of the other deficiencies to management.  In either case, the auditor may report orally or in writing to those charged with governance as appropriate.

A26.         ASA 260 establishes relevant considerations regarding communication with those charged with governance when all of them are involved in managing the entity.[11]

Considerations Specific to Public Sector Entities (Ref: Para. 9‑10)

A27.         Public sector auditors may have additional responsibilities to communicate deficiencies in internal control that the auditor has identified during the audit, in ways, at a level of detail and to parties not envisaged in this Auditing Standard.  For example, significant deficiencies may have to be communicated to the legislature or other governing body.  Law, regulation or other authority