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Case 3 5

Management Control Systems

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[3] The following requirements relate to Ms. Stitt’s testimony about the audit committee presentation: [a] Provide a brief overview of the requirements of AU Section 380. Be sure to describe the overall purpose of this required communication. AU section 380 SAS No. 114 The Auditor’s Communication with Those Charged with Governance supersedes SAS No. 61 as of December 16, 2006. The key change that SAS No. 114 instilled in AU section 380 is it added specific issues to be addressed to individuals charged with an entity’s governance. The overall purpose of AU section 380 is to describe the purpose of communication with those charged with governance and clarify auditor responsibilities including significant audit findings and the communication process. The following is a brief overview of AU section 380: Requires the auditor to communicate particular matters with the appropriate person(s) based on the entity’s governance structure. That person may vary depending on the nature of the matter to be communicated. Requires the auditor to report to a regulatory or enforcement body certain matters communicated with those charged with governance. Recognizes the diversity in governance structures among entities (including the existence of audit committees or other subgroups charged with governance) and encourages the use of professional judgment in deciding with whom to communicate particular matters. Recognizes the unique considerations for communicating with those charged with governance when all of those charged with governance are involved in managing the entity, which may be the case with some small entities. Adds requirements to communicate:
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Case 3 5 - [3 The following requirements relate to Ms...

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