Auditing Standard No. 260: Informing the governing bodies

Auditing Standard No. 260: Informing the governing bodies

Notifying the governing bodies that we want to tell you so that it can be added to your information.

The role of information

This standard mainly focuses on informing the auditor to the management elements.

However, effective two-way communication is important in the following cases:

Helping the independent auditor and the management to understand the issues related to the audit and to create a constructive working relationship.
In establishing this relationship, realism and maintaining the independence of the independent auditor is of particular importance.

Helping the auditor to obtain information related to the audit from the governing bodies.
For example, guidance may assist the independent auditor in understanding the entity and its environment, identifying appropriate sources of audit evidence, and providing information about specific transactions or events.

Helping the governing bodies to fulfill their responsibilities regarding monitoring the financial reporting process and thus reducing the risks of material distortion of financial statements (paragraph 4).
Although the independent auditor is responsible for notifying the subjects required in this standard, but the executive directors are also responsible for notifying the subjects related to the management of the business unit to the governing bodies.

The notification of the independent auditor does not absolve the executive directors of their responsibility.

In the same way, informing the executive directors to the governing bodies about the issues that the independent auditor is required to inform, does not reduce the responsibility of the independent auditor to inform them.

However, the notification of these issues by the executive directors may be effective on the form and timing of the auditor’s notification to the management elements (paragraph).

Clear communication of specific issues is an integral part of any audit work, which is also required by auditing standards.

However, the auditing standards do not specifically require the independent auditor to perform certain methods to detect other issues to inform the governing bodies (paragraph 6).

Objectives of the independent auditor in informing the governing bodies
In this case, the objectives of the independent auditor are as follows:

Clear information to the governing bodies regarding the responsibilities of the independent auditor in relation to the audit of the financial statements and the general scope and schedule of the audit work.
Obtaining information related to the audit from the governing bodies.
Timely notification of the audit findings to the governing bodies, which is considered important and relevant in relation to their responsibility in monitoring the financial reporting process.
Strengthening the effective two-way communication between the independent auditor and the governing bodies.