Auditing Several communications must be made between the client and the auditor.

Question

Auditing
Several communications must be made between the client and the auditor. Some of those communications are listed below.
Lawyer’s response to a letter of inquiry.
Management representation letter.
Engagement letter.
Management letter.
Internal control deficiencies.
Communications with individuals charged with governance.

REQUIRED: For each of the items listed above, indicate the following information about the communication.
The person(s) responsible for signing the communication.
Whether the communication is required or optional under generally accepted auditing standards(GAAS).
At what point in the audit process the communication should be sent.
The purpose of the communication.

Explanation / Answer

Answer to the Question

Nature of communication Signing person Applicability of GAAS Point of communication Purpose of communication Lawyer’s response to a letter of inquiry. Cilent Lawer YES, Section 337 During Audit To obtain understanding on pending litigation,Claims etc Management representation letter. Authorized person of the Auditee( Management) YES, Section 333 Before completion of audit Audit is conducted subjected to the points mentioned in the letter. Engagement letter. Auditee and Auditor Yes Beginning of audit Legal relationship between Auditor and auditee. Management letter. Management No During audit To obtainan understanding on clients business Internal control deficiencies. Not mandatory yes During audit To obtain better understanding and focusing on Risk areas during audit. Communications with individuals charged with governance. Not Mandatory ISA 260 During audit Communication of the Deficiency to the person charged with Governance.

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