Question

Discuss the four principal purposes of the required communication with the audit committee regarding certain additional information obtained during the audit.

Answer 1

The committee of board of directors of a publicly listed company which assists auditor for doing the act independently is known as audit committee.

Required purposes of communications are as below:

No.1) Financial statements: These are income statement, balance sheet, retained earnings statement, and cash flow statement. A statutory auditor has to audit all these for reliability and authenticity. The auditor has to communicate with the audit committee for discharging such responsibility.

No.2) The communication is required for providing the scope and duration of auditing.

No.3) The communication becomes necessary if explanation is required on any significant findings (like, physical stock of inventory doesn’t tally with recorded inventory).

No.4) Auditor receives explanations from the audit committee which was charged to them (like, the committee should explain why such mismatch is there in inventory).