PCAOB on Communications with the Audit Committee

Question 1

What are the auditors objectives with audit committees?

Answer 1

1) Communicate to the audit committee the responsibilities
2) Obtain information relevant to the audit
3) Communicate the strategy and timing
4) Communicate significant audit matters

Question 2

What is a critical accounting estimate?

Answer 2

Material and uncertain matters that change and impact on the to the F/S is material

Question 3

What are critical accounting policies and practices?

Answer 3

Important accounting policies that are important to the end results of the F/S, requires management complex judgements which require estimates which are uncertain

Question 4

What matters need to be communicated to the audit committee?

Answer 4

1) Appointment and retention (issues discussed with management, establishing and understanding of the audit, inquiry about relevant matters to the audit, communicate audit risks and strategy)

Question 5

What should the auditors communicate with respect to the results of the audit?

Answer 5

1) Accounting policies, estimates, and unusual transactions
2) Evaluation of the quality of financial reporting
3) Auditors responsibility for the information
4) Difficult or contentious matters
5) Managements consolations with other CPAs
6) Going concern issues
7) Corrected/uncorrected misstatements
8) Material written communications
9) Departures from usual report (modifications or explanatory language)
10) Disagreements with management, even if resolved
11) Difficulties encountered
12) Other significant matters

Question 6

What is the form of and timing of communication?

Answer 6

Form- Oral or written, unless otherwise specified

Timing- Should be timely and proper to the issuance of the auditors report