Document ID: chunk:federal_register_of_legislation:F2023C01128:reg:17:p17
Version: federal_register_of_legislation:F2023C01128
Segment Type: reg
Provision Reference: reg 17 (pt 17/25)
Character Range: 53909–57095

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 with governance who will communicate regarding particular matters.

           * The auditor's expectation that communication will be two‑way, and that those charged with governance will communicate with the auditor matters they consider relevant to the audit, for example, strategic decisions that may significantly affect the nature, timing and extent of audit procedures, the suspicion or the detection of fraud, and concerns with the integrity or competence of senior management.

           * The process for taking action and reporting back on matters communicated by the auditor.

           * The process for taking action and reporting back on matters communicated by those charged with governance.

A39.         The communication process will vary with the circumstances, including the size and governance structure of the entity, how those charged with governance operate, and the auditor's view of the significance of matters to be communicated.  Difficulty in establishing effective two‑way communication may indicate that the communication between the auditor and those charged with governance is not adequate for the purpose of the audit (see paragraph A52).

Considerations Specific to Smaller Entities

A40.         In the case of audits of smaller entities, the auditor may communicate in a less structured manner with those charged with governance than in the case of listed or larger entities.

Communication with Management

A41.         Many matters may be discussed with management in the ordinary course of an audit, including matters required by this Auditing Standard to be communicated with those charged with governance.  Such discussions recognise management's executive responsibility for the conduct of the entity's operations and, in particular, management's responsibility for the preparation of the financial report.

A42.         Before communicating matters with those charged with governance, the auditor may discuss them with management, unless that is inappropriate.  For example, it may not be appropriate to discuss questions of management's competence or integrity with management.  In addition to recognising management's executive responsibility, these initial discussions may clarify facts and issues, and give management an opportunity to provide further information and explanations.  Similarly, when the entity has an internal audit function, the auditor may discuss matters with the internal auditor before communicating with those charged with governance.

Communication with Third Parties

A43.         Those charged with governance may be required by law or regulation, or may wish, to provide third parties, for example, bankers or certain regulatory authorities, with copies of a written communication from the auditor.  In some cases, disclosure to third parties may be illegal or otherwise inappropriate.  When a written communication prepared for those charged