Communication with Management and Those Charged with Governance - M10

Question 1

Material Weaknesses vs. Significant Deficiencies

Answer 1

• Material weakness in internal control is also considered a significant deficiency.

Question 2

What should the report on significant deficiencies contain in it?

Answer 2

Indicate that providing assurance on internal control was not the purpose of the audit.

Question 3

How should auditor report on control deficiencies?

Answer 3

• The auditor should separately identify significant deficiencies and material weaknesses.
• The auditor is not obligated to search for significant deficiencies. The auditor is obligated to communicate to the client any significant deficiencies identified while auditing the financial statements.
• The auditor is obligated to re-communicate significant deficiencies each year, even if management has acknowledged its understanding of such deficiencies

Question 4

What should be communicated to Governance resolved or not?

Answer 4

• Any significant disagreements and adjustments with management.