Question

What information (and to who) is the auditor required to communicate at the conclusion of an audit?

Answer 1

An auditor should communicate with the audit committee regarding all facts and incidents of audit. Such committee is established by the board of directors and if there is no such committee the whole board of directors will be treated as audit committee.

Informations to be communicated are as below:

Point 1) Application of accounting policies: The auditor should communicate whether policies relating to accounting are followed properly or not. In the process of doing so the auditor should mention all disputed areas.

Point 2) Consequences: If there is any critical area, the auditor must mention consequences out of it in future. Suppose charging excess depreciation may not increase share price in the market.

Point 3) Unusual transaction: This is to be communicated because of preventive measure. Such type of transaction may be a fraudulent attempt and this is to stopped immediately. Suppose a transaction of cash that has no supporting voucher.