Document ID: chunk:federal_register_of_legislation:F2023C01128:reg:17:p7
Version: federal_register_of_legislation:F2023C01128
Segment Type: reg
Provision Reference: reg 17 (pt 7/25)
Character Range: 25176–28286

Communication Process

22.               The auditor shall evaluate whether the two‑way communication between the auditor and those charged with governance has been adequate for the purpose of the audit.  If it has not, the auditor shall evaluate the effect, if any, on the auditor's assessment of the risks of material misstatement and ability to obtain sufficient appropriate audit evidence, and shall take appropriate action.  (Ref: Para. A51–A53)

Documentation

23.               Where matters required by this Auditing Standard to be communicated are communicated orally, the auditor shall include them in the audit documentation, and when and to whom they were communicated.  Where matters have been communicated in writing, the auditor shall retain a copy of the communication as part of the audit documentation.[2] (Ref: Para. A54)

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Application and Other Explanatory Material

Those Charged with Governance (Ref: Para. 11)

A1.             Governance structures vary by jurisdiction and by entity, reflecting influences such as different cultural and legal backgrounds, and size and ownership characteristics.  For example:

           * In some jurisdictions, a supervisory (wholly or mainly non‑executive) board exists that is legally separate from an executive (management) board (a "two‑tier board" structure).  In other jurisdictions, both the supervisory and executive functions are the legal responsibility of a single, or unitary, board (a "one‑tier board" structure).

           * In some entities, those charged with governance hold positions that are an integral part of the entity's legal structure, for example, company directors.  In others, for example, some public sector entities, a body that is not part of the entity is charged with governance.

           * In some cases, some or all of those charged with governance are involved in managing the entity.  In others, those charged with governance and management comprise different persons.

           * In some cases, those charged with governance are responsible for approving[3] the entity's financial report (in other cases management has this responsibility).

A2.             In most entities, governance is the collective responsibility of a governing body, such as a board of directors, a supervisory board, partners, proprietors, a committee of management, a council of governors, trustees, or equivalent persons.  In some smaller entities, however, one person may be charged with governance, for example, the owner‑manager where there are no other owners, or a sole trustee.  When governance is a collective responsibility, a subgroup such as an audit committee or even an individual, may be charged with specific tasks to assist the governing body in meeting its responsibilities.  Alternatively, a subgroup or individual may have specific, legally identified responsibilities that differ from those of the governing body.

A3.             Such diversity means that it is not possible for this Auditing Standard to specify for all audits the person(s) with whom the auditor is to communicate particular matters.