Meaning Scope of SA Role of communication between TCWG and Auditor Applicability Auditor’s responsibilities Matters to be communicated to TCWG Objectives Factors affecting forms of communication Documentation

1. SA 260 – Communication with those charged with
governance
B.SUMA
2nd year Intern
M/s SBS and Company LLP
sumab@sbsandco.com
by
SBS Hyderabad
1st June 2019
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www.sbsandco.com2
TCWG
Company
Management
Auditor

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∞ Meaning
∞ Scope of SA
∞ Role of communication between TCWG and Auditor
∞ Applicability
∞ Auditor’s responsibilities
∞ Matters to be communicated to TCWG
∞ Objectives
∞ Factors affecting forms of communication
∞ Documentation
Index

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Those charged with governance Management
Those who supervises, directs and checks the entity. Responsible for day to day functioning of the entity
Super vision group Implementation group
Meaning

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∞ Auditor’s responsibility to communicate with those charged with governance in
an Audit of financial statements.
∞ Recognising the importance of two way communication in an Audit of financial
statements.
Scope of SA

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Effective two way communication is important in assisting:
∞ The Auditor and those charged with governance in understanding matters
related to the Audit in context.
∞ The Auditor in obtaining from those charged with governance information
relevant to the Audit.
∞ Those charged with governance in fulfilling their responsibility to oversee the
financial reporting process.
∞ Law or regulation may restrict the Auditor’s communication of certain matters
with TCWG.
Role of communication between TCWG
and Auditor

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∞ Applicable to irrespective of an entity’s governance size or structure.
∞ This SA is effective for Audits of financial statements for periods beginning on or
after April 1, 2017.
Applicability

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∞ Determine the appropriate person to whom communication can be made.
∞ Need to communicate with governing body, if communication is sub group.
∞ If Auditor is not satisfied with the response of sub group or he feels it is
appropriate, he may communicate to governing body also.
∞ If all the TCWG are involved in managing the entity, the matter need not be
communicated again.
Auditor’s responsibilities

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∞ Auditor’s responsibility in relation to financial statement Audit.
∞ Planned scope and timing of Audit.
∞ Significant findings in Audit with respect to:
Significant quality aspects.
Accounting estimates and accounting policies.
Material weakness in internal controls
Significant difficulties, if any, encountered during the Audit.
Other significant matters.
∞ Statement with respect to compliance of ethical requirements regarding
independence in case of listed companies.
∞ Circumstances that effect the form and content of the Auditor’s report if any.
Matters to be communicated

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∞ Promote two way communication between the Auditor an TCWG.
∞ Communicate clearly with TCWG the responsibilities and planning of the Audit.
∞ Obtain information from TCWG relevant to Audit.
∞ Provide TCWG timely observations arising from the Audit that are significant
and relevant to their responsibility to oversee the financial reporting process.
Objectives

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∞ In writing when oral communication is not adequate.
∞ On timely basis.
∞ Expectations of TCWG including arrangements made for periodic meetings or
communications with the Auditor.
∞ Size, operating structure, control environment and legal structure of the entity.
∞ In case of an Audit of special purpose financial statements, whether Auditor also
Audits the general purpose financial statements.
∞ Evaluate adequacy of communication for the purpose of the Audit.
If not adequate, evaluate its effect on the Auditor’s assessment of risks of
material misstatement.
Factors affecting Communication process

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Following are to be documented by the Auditor:
∞ When and to whom they were communicated.
∞ Matters communicated in writing.
Documentation

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Thank you!!!
B.SUMA
2nd year Intern
M/s SBS and Company LLP
sumab@sbsandco.com
Venue:
SBS and company LLP,
Hyderabad.
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