Document ID: chunk:federal_register_of_legislation:F2023C01128:reg:17:p16
Version: federal_register_of_legislation:F2023C01128
Segment Type: reg
Provision Reference: reg 17 (pt 16/25)
Character Range: 50993–54177

the business.  Examples of such entities may include financial institutions (such as banks, insurance companies, and superannuation funds), and other entities such as charities.  On the other hand, there may be situations where communications regarding independence may not be relevant, for example, where all of those charged with governance have been informed of relevant facts through their management activities.  This is particularly likely where the entity is owner‑managed, and the auditor's firm and network firms have little involvement with the entity beyond a financial report audit.

Supplementary Matters (Ref: Para. 3)

A33.         The oversight of management by those charged with governance includes ensuring that the entity designs, implements and maintains appropriate internal control with regard to reliability of financial reporting, effectiveness and efficiency of operations and compliance with applicable laws and regulations.

A34.         The auditor may become aware of supplementary matters that do not necessarily relate to the oversight of the financial reporting process but which are, nevertheless, likely to be significant to the responsibilities of those charged with governance in overseeing the strategic direction of the entity or the entity's obligations related to accountability.  Such matters may include, for example, significant issues regarding governance structures or processes, and significant decisions or actions by senior management that lack appropriate authorisation.

A35.         In determining whether to communicate supplementary matters with those charged with governance, the auditor may discuss matters of this kind of which the auditor has become aware with the appropriate level of management, unless it is inappropriate to do so in the circumstances.

A36.         If a supplementary matter is communicated, it may be appropriate for the auditor to make those charged with governance aware that:

(a)                Identification and communication of such matters is incidental to the purpose of the audit, which is to form an opinion on the financial report;

(b)                No procedures were carried out with respect to the matter other than any that were necessary to form an opinion on the financial report; and

(c)                No procedures were carried out to determine whether other such matters exist.

The Communication Process

Establishing the Communication Process (Ref: Para. 18)

A37.         Clear communication of the auditor's responsibilities, the planned scope and timing of the audit, and the expected general content of communications helps establish the basis for effective two‑way communication.

A38.         Matters that may also contribute to effective two‑way communication include discussion of:

           * The purpose of communications.  When the purpose is clear, the auditor and those charged with governance are better placed to have a mutual understanding of relevant issues and the expected actions arising from the communication process.

           * The form in which communications will be made.

           * The person(s) in the engagement team and among those charged