SA265.pdf

An indication that such communication has been

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An indication that such communication has been provided for the purposes of those charged with governance, and that it may not be suitable for other purposes. A30. Law or regulation may require the auditor or management to furnish a copy of the auditor’s written communication on significant deficiencies to appropriate regulatory authorities. Where this is the case, the auditor’s writ ten communication may identify such regulatory authorities. Material Modifications to ISA 265, “Communicating Deficiencies in Internal Control to Those Charged with Governance and Management Deletions 1 Paragraph A7 of ISA 265(A7 of SA 265) provides the examples of the indicators of significant deficiencies in internal control which may include restatement of previously issued financial statements to reflect the correction of a material misstatement due to error or fraud. Since in India Accounting Standard (AS) 5, “Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies” requires that prior period items should be separately disclosed in the Statement of Profit and Loss in a manner that their impact on the current profit or loss can be perceived, the restatement of the prior period financial statements does not exist in the Indian scenario. Hence, to align with the requirements of AS 5, the requirement of restatement of prior period items
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SA 265 13 has been replaced with the requirement to disclose the prior period items in the current year’s Statement of Profit & Loss. 2. Paragraph A27 of ISA 265 (A27 of SA 265) deals with the additional responsibilities of the public sector auditors to communicate/report deficiencies in internal control to the legislature or governing body. Since as mentioned in the “Preface to the Standards on Quality Control, Auditing, Review, Other Assurance and Related Services”, the Standards issued by the Auditing and Assurance Standards Board, apply equally to all entities, irrespective of their form, nature and size, a specific reference to applicability of the Standard to public sector entities has been deleted. Further, it is also possible that such additional responsibilities may also be imposed on the auditor in case of non public sector entities pursuant to a requirement under the statute or regulation under which they operate. Accordingly, the spirit of Paragraph A27 in ISA, highlighting the fact, has been retained though a specific reference to public sector entities has been deleted.
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