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    SA 265: Communicating Deficiencies in Internal Control To TCWG and Management

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    VANDANA GOYAL
    1. The document provides guidance for communicating deficiencies in internal control (IC) identified during an audit to those charged with governance (TCWG) and management. 2. It defines deficiencies in IC and significant deficiencies in IC. Significant deficiencies are those important enough to merit attention from TCWG. 3. The auditor must determine if any deficiencies identified constitute a significant deficiency and communicate such deficiencies to TCWG on a timely basis, as well as to management.

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    SA 265: Communicating Deficiencies in Internal Control To TCWG and Management

    Uploaded by

    VANDANA GOYAL
    336 views1 page
    1. The document provides guidance for communicating deficiencies in internal control (IC) identified during an audit to those charged with governance (TCWG) and management. 2. It defines deficiencies in IC and significant deficiencies in IC. Significant deficiencies are those important enough to merit attention from TCWG. 3. The auditor must determine if any deficiencies identified constitute a significant deficiency and communicate such deficiencies to TCWG on a timely basis, as well as to management.

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    SA 265

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    1. The document provides guidance for communicating deficiencies in internal control (IC) identified during an audit to those charged with governance (TCWG) and management. 2. It defines deficiencies in IC and significant deficiencies in IC. Significant deficiencies are those important enough to merit attention from TCWG. 3. The auditor must determine if any deficiencies identified constitute a significant deficiency and communicate such deficiencies to TCWG on a timely basis, as well as to management.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    336 views1 page

    SA 265: Communicating Deficiencies in Internal Control To TCWG and Management

    Uploaded by

    VANDANA GOYAL
    1. The document provides guidance for communicating deficiencies in internal control (IC) identified during an audit to those charged with governance (TCWG) and management. 2. It defines deficiencies in IC and significant deficiencies in IC. Significant deficiencies are those important enough to merit attention from TCWG. 3. The auditor must determine if any deficiencies identified constitute a significant deficiency and communicate such deficiencies to TCWG on a timely basis, as well as to management.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    SA 265: Communicating Deficiencies in Internal Control to TCWG and Management

    Objective: Communicate deficiencies in Internal Control (IC) to TCWG and Mngt that auditor has
    identified during the audit and that are of sufficient importance to draw their attention.

    Definitions:
    1. Deficiency in IC: Deficiency in IC exists when
    a. A control is designed, implemented or operated in such a way that it is unable to prevent,
    detect or correct misstatement in FS
    b. A control necessary to prevent, detect or correct misstatement in FS is missing.

    2. Significant Deficiency in IC: When an individual or combination of deficiencies in IC, in auditor’s


    professional judgment, is of sufficient importance to merit attention of TCWG.

    Auditor’s Consideration:
    On the basis of work performed, determine whether he has identified one or more deficiencies in IC

    Whether the Deficiency is of importance that is individually or collectively constitute Significant


    Deficiency

    Communicate the Deficiency to TCWG on timely basis

    Also communicate the same to Mngt

    That he has communicated or intends to Other Significant Deficiencies


    communicate deficiencies to TCWG not communicated to Mngt by other parties

    The written communication shall include:


    1. Description of deficiencies and explanation of potential effects
    2. Sufficient info so that TCWG and Mngt can understand the context of communication,
    particularly:
    a. The audit was to express opinion on FS
    b. The auditor has considered only those IC that are relevant for preparation of FS and not
    for expressing opinion on effectiveness of IC.
    c. The auditor has reported only those deficiencies that has been identified during audit
    and that are of significant importance and not all IC

    Factors affecting Significance of deficiencies in IC:


    1. Likelihood of deficiencies leading to material misstatement in FS
    2. Susceptibility to loss or fraud
    3. Financial Statement amount exposed to such deficiencies
    4. Importance of control to FR process
    5. Interaction of deficiencies with other IC

    Indicators of Significant Deficiencies in IC:


    1. Ineffective control environment (Untrained staff, Mngt failure to take remedy against
    deficiencies)
    2. Absence of Risk Assessment process in entity
    3. Evidence of ineffective response to identified risk
    4. Misstatements detected by auditor not prevented, detected or corrected by entity’s IC
    5. Evidence of management’s inability to oversee preparation of FS

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