Auditors might also issue a report called a

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Auditors might also issue a report called a management letter. This letter may contain commentary and suggestions on a variety of matters in addition to internal control matters; for example, operational and administrative efficiency, business strategy, and profit-making possibilities. Management letters are not required by auditing standards but are advice to management offered as a part of an audit. Concern about reporting control-related matters within a company has spilled over to a set of other important matters that auditors are required to report on to companies’ audit committees or others with oversight responsibility. 16 The purpose of these communications is to enhance the audit committees’ ability to oversee the audit functions (external and internal) in a company. The auditors are responsible for informing the audit committee about the following matters: Independent auditors’ responsibilities regarding financial statements and other infor- mation in documents that include the audited financial statements (e.g., the annual report to shareholders and filings with the regulatory agencies such as the OSC or Superintendent of Financial Institutions) Management’s significant accounting policies Management judgments about accounting estimates used in the financial statements Significant audit adjustments recommended by the auditors Disagreements with management about accounting principles, accounting estimates, scope of the audit, disclosures in the notes, and wording of the audit report The auditor’s view on accounting matters on which management has consulted with other accountants Major accounting and auditing issues discussed with management in connection with beginning or continuing an auditor-client relationship EXHIBIT 16–16 COMMUNICATION OF MATTERS IDENTIFIED DURING THE FINANCIAL STATEMENT AUDIT During the course of my audit of ………………………. for the year ended ……., I identified matters which may be of interest to management. The objective of an audit is to obtain reasonable assurance whether the financial statements are free of material misstatement, and it is not designed to identify matters that may be of interest to management in discharging its responsibilities. Accordingly an audit would not usually identify all such matters. The matters identified were …………. This communication is prepared solely for the information of management and is not intended for any other purpose. I accept no responsibility to a third party who uses this communication. Source: © CICA Handbook , paragraph 5750.08. 12 CAS 265 (CICA Handbook , section 5750.) 13 CAS 260 (CICA Handbook , section 5751. ) 14 AuG-13, “Special Reports on Regulated Financial Institutions.” 15 CAS 265 (CICA Handbook , section 5750.) 16 CAS 260 (CICA Handbook , section 5751.)
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648 PART IV Other Professional Services Illegal acts Difficulties with management encountered while performing the audit: delays in start- ing the audit or providing information, unreasonable time schedule, unavailability of
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  • Fall '12
  • Smith
  • Accounting, Accountant, Auditor's report, CICA Handbook

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