Auditor Required Communications with Audit Committees

The guidance covering these requirements is located in the following sections of the revised AICPA Auditing Standards (SAS) Codification – Post Clarity (subsequent to the Clarity Project):

  • AU-C Section 260, “The Auditor’s Communication with Those Charged With Governance”
  • AU-C Section 240, “Consideration of Fraud in a Financial Statement Audit”
  • AU-C Section 250, “Consideration of Laws and Regulations in an Audit of Financial Statements”
  • AU-C Section 265, “Communicating Internal Control Related Matters Identified in an Audit”

Communications for All Audits

  • An overview of planned scope and timing of audit
  • Auditor responsibility under generally accepted auditing standards (GAAS)
  • Methods of accounting for significant unusual transactions and effects of policies in controversial or emerging areas (e.g., revenue recognition; off-balance sheet financing; and accounting for equity investments)
  • Management judgments and accounting estimates
  • Auditors’ judgment about the quality of the organization’s accounting principles
  • Adoption of or change in an accounting principle
  • Material, corrected misstatements brought to the attention of management by the auditors
  • Unrecorded misstatements, other than those the auditors believe to be trivial
  • Other information in documents containing audited financial statements (e.g., annual reports)
  • Disagreements with management
  • Consultation with other accountants
  • Major issues discussed with management prior to retention (initial or recurring)
  • Significant issues discussed with management (i.e., operational considerations/and plans and strategies)
  • Significant difficulties encountered during the audit
  • Fraud and illegal acts
  • Representations requested from management
  • Other issues arising from the audit that the auditors consider significant and relevant to those charged with governance
  • Significant deficiencies and material weaknesses identified during the audit
  • Independence


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