ACC618 Week 5 Discussion 2 AICPA and PCAOB Standards

Mintz and Morris (2014) state that “AS 16, Communications with Audit Committees requires the auditor to communicate with the audit committee of the company regarding certain items relating to the performance of an audit and to acquire certain information from the audit committee relevant to the audit” (pg. 288). Auditors are obligated to inform the audit committee of the engagement details, audit scope, and audit schedule. In addition, the auditor must collect data pertinent to the audit from the audit committee. In addition, auditors must promptly disclose any issues that may have a material effect on the financial reporting process, such as serious inadequacies or material weaknesses in corporate procedures, policies, going concern, or transactions that result from error or suspected fraud. Finally, if the client (management/staff) is not cooperating with the audit, auditors should inform the audit committee of this fact.

In light of the foregoing, it is clear that auditors need to maintain open lines of written or verbal communication with the audit committee and the client’s management team on the audit’s objectives and the auditor’s responsibilities in order to achieve successful audit results. Neither the audit team nor the client will be able to avoid making mistakes in their reports if the scope is not clearly defined. The auditor must make note of any important matters in the final audit report if the audit committee does not comply and persistently rejects the auditor’s communication.

This step guarantees that the auditor is acting independently and in the public interest throughout the audit process.

Reference:

Mintz, S. M., & Morris, R. E. (2014). Ethical obligations and decision making in accounting: Text and cases (3rd ed.). Retrieved from https://www.vitalsource.comLinks to an external site.