ISA 260 Communication with those charged with governance MCQs

1. The main forms of formal communication between the auditors and management are:

1. 1. the engagement letter
   2. written communication (the management letter)
   3. Both A&B
   4. None

2. Reasons for communicating to those charged with governance might include:

1. 1. To communicate responsibilities of the auditor and an overview of the scope and timing of the audit.
   2. To obtain information relevant to the audit.
   3. To report matters from the audit on a timely basis.
   4. To promote effective two-way communication.
   5. All of the above

3. Matters that should be reported to those charged with governance include:

1. 1. The auditor’s responsibilities in relation to the financial statements audit.
   2. The planned scope and timing of the audit
   3. Significant findings from the audit
   4. Matters of auditor independence.
   5. All of the above

4. What constitutes a matter requiring the attention of those charged with governance is a matter of professional judgment. Typical examples include:

1. 1. Delays in obtaining information for the audit
   2. Expected limitations on the audit, either imposed by management or other circumstances.
   3. Material uncertainties related to events and conditions that may cast significant doubt on the entity’s ability to continue as a going concern.
   4. All of the above

5. What type of communication with those charged with governance is required at “Planning” stage?

1. 1. Significant risks identified by the auditor
   2. How the auditor plans to address the risks
   3. Auditor’s approach to internal control relevant to the audit
   4. Application of materiality in the context of an audit
   5. All of the above

6. The auditor’s objectives in respect of ISA 260 are to:

1. 1. communicate their responsibilities and give an overview of the planned scope and timing of the audit
   2. obtain information relevant to the audit
   3. provide timely observations arising from the audit which are significant to management’s responsibility to oversee the financial reporting process
   4. All of the above

7. The communication with those charged with governance may be provided either in writing or orally.

1. 1. True
   2. False

8. ISA 260 requires that communication is in writing, in the form of a letter or report. If communication is oral then the matters communicated, to whom and when must be documented.

1. 1. True
   2. False

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