#6 Communication with management and those charged with governance

Question 1

Communication on I/C for audit of nonissuer F/S

Answer 1

*Provided in writing within 60 days of audit report date
*Addressed to and restricted for use by client management and those charged with governance
*Defines and explains identified significant deficiencies and material weaknesses
*States audit was not designed to identify all significant deficiencies or material weaknesses
*Specifically expresses no opinion on I/C effectiveness

!!Financial statement audits apply only to nonissuers; PCAOB requires integrated audits of issuers.
!! Audit may identify significant deficiencies or material weakness in ICFR, both must be communicated to management.
Communication must be in writing and specifically restrict distribution to management and client personnel only because the audit purpose was not to express an opinion on ICFR

Question 2

Using component auditors

Answer 2

*Commonly CPA firm would use component auditors to assist when involving multiple segments, components, international locations.
*Group engagement team is responsible for overseeing the entire audit and ensuring effective communication with all parties.
*Group engagement team must communicate information on material weakness and significant deficiencies to group management and those charged with governance.

Question 3

Written internal control communication for nonissuers

Answer 3

Include:
*Unresolved prior material weakness or significant deficiencies
*Current material weaknesses or significant deficiencies

Exclude:
*Resolved prior material weaknesses or significant deficiencies
*Unresolved prior issues that no longer material weaknesses or significant deficiencies

Question 4

Communication on I/C for audit of nonissuer F/S

Answer 4

*Provided in writing within 60 days of audit report date
*Addressed to and restricted for use by client management and those charged with governance
*Defines and explains identified significant deficiencies and material weakness
*States audit was not designed to identify all significant deficiencies or material weaknesses.
*Specifically expresses no opinion on I/C effectiveness.

!!Only nonissuers can choose either a F/S audit or an integrated audit. PCAOB regulations require that issuer audits be integrated.