The-Accountant-Jul-Aug-2017

More documents

Recommendations

Info

Governance COMMUNICATION OF AUDIT MATTERS ByCPA Maroa Julius Mwita, juliusmaroas@gmail.com According to ISA 260, auditors are required to communicate audit matters of governance interest to those charged with governance as it is sufficient that those charged with governance are made to understand all significant matters arising from audit. By definition, ‘‘those charged with governance’’ means the person(s) with responsibility for overseeing the strategic direction of the entity and obligations related to the accountability of the entity. ‘‘Governance’’ is a term used to describe the role of persons entrusted with supervision control and direction of the entity. Before communicating those matters to management, the 20 JULY - AUGUST 2017
Governance auditor should discuss the matters with management first at initial stages in order to clarify facts and issues, and to give management an opportunity to provide further information and explanations. An article entitled ACCA Think Ahead; indicates that when considering the reporting outputs of an audit of historical financial information, attention is usually focused on the audit opinion issued by auditors to shareholders in case of limited companies. However, it further indicates that another great output produced in the auditors’ report is the aspect of the auditor’s communication to those charged with governance. In order to make the communication work well, it will be important to understand to whom the communication should be directed to although the Auditing standards do not specify the actual person(s) the communication should be directed. But to my understanding, it should be directed to persons entrusted with supervision, control and direction of the entity (Governance) often called the accounting officers in the public sector in Kenya as those charged with governance ordinarily are accountable for ensuring that the entity achieves its objectives, with regard to reliability, effectiveness and efficiency of operations compliance with applicable laws. However, the appropriate person(s) to be communicated may vary depending on the matter to be communicated. It should be understood that audit matters of governance include only those matters that have come to the attention of the auditors as a result of performing their audit function and should be communicated on timely basis in order to enable those charged with governance to take appropriate action. The auditor must communicate with those charged with governance, matters related to the financial statement audit that are, in the auditor’s professional judgment, significant and relevant in terms responsibilities of those charged with governance in overseeing the financial reporting process. However, certain aspects like legal requirements depending on the legal structure existing in a given country may require that communication of matters to those charged with governance be communicated to legal entities and this matters may include ; fraud, illegal acts, improprieties in procurement process, violation of contracts or agreements and other illegal acts. Auditors should communicate matters relating to; • Auditor’s responsibilities under generally accepted auditing standards. • An overview of the audit planning, scope and timing of audit. • The audit of the financial statements does not relieve management or those charged with governance of their responsibilities. • The auditors are responsible for forming and expressing an opinion about whether the financial statements that have been prepared by management are presented fairly, in all material respects, in conformity with Generally Acceptable Accounting Standards (GAAPS). • The relationships that may bear on the auditor’s independence and objectivity, audit findings from the audit including the auditors’ views on the qualitative aspects of the entity’s accounting and reporting. • Concept of materiality and its application to the audit approach. • The way auditors propose to address the risk of material misstatements, with particular reference to areas of high risk. • The auditors’ approach to the assessment of, and reliance on, internal controls. • The extent, if any, to which reliance should be placed on the work of internal audit and on the best way internal and external auditors can work best on a constructive and complementary basis. • Expected modifications to the auditors’ report in order to ensure that those charged with governance are aware of the proposed modifications and the reasons for it before the report is finalized. Those charged with governance mandate have an opportunity, where appropriate, to provide auditors with further information and explanations in respect to matter(s) giving rise to the proposed modification. This also helps ensure that no disrupted facts in respect of the matter(s) giving rise to the proposed modification or matters of disagreements are confirmed as such. • Unadjusted misstatements detected by the auditors. When misstatements identified by the auditors are not adjusted by the entity’s management the auditors communicate all such unadjusted misstatements. In case of refusal to make further adjustments by those charged with governance, the auditors’ should still explain the reasons for, and appropriateness of, not making those adjustments having regard to both qualitative and JULY - AUGUST 2017 21
Page 1: JOURNAL OF THE INSTITUTE OF CERTIFI
Page 4 and 5: YOUR VIEWS SHARE YOUR VIEWS Email:
Page 6 and 7: Financial reporting and assurance P
Page 8 and 9: Business Practice and Development E
Page 10 and 11: Business practice and development C
Page 12 and 13: Business practice and development T
Page 14 and 15: Finance and investment KENYAN SMALL
Page 16 and 17: Finance and investment a) Use of Ne
Page 18 and 19: Management THE ILLUSION OF KNOWLEDG
Page 20 and 21: Economy Why Marine Insurance is Ess
Page 24 and 25: Governance quantitative considerati
Page 26 and 27: Governance In view of the high prof
Page 28 and 29: Governance Principal Secretary for
Page 30 and 31: Governance Private sector manages r
Page 32 and 33: Public Policy Taxation of Exported
Page 34 and 35: Public Policy This brings about an
Page 36 and 37: COVER STORY TRADE SECRETS Is Your D
Page 38 and 39: COVER STORY secrets (called “undi
Page 40 and 41: WORK PLACE MOBBING AND BULLYING Wor
Page 42 and 43: INSPIRATION WHY DO WE LIE? By Angel
Page 44 and 45: SOCIETY THE CULTURAL ENVIRONMENT OF
Page 46 and 47: SOCIETY e.g. in Islamic and Buddhis
Page 48 and 49: ENVIRONMENT BANNING PLASTIC BAGS IN
Page 50 and 51: ENVIRONMENT empty and for some food
Page 52 and 53: HEALTH picture yourself tackling ot
Page 54 and 55: TID BITS They’ve broken free of t
Page 56 and 57: BOOK REVIEW Reviewed by Angela Muti
Page 58 and 59: INSTITUTE NEWS NEW CHAIRMAN FOR ICP
Page 60 and 61: INSTITUTE NEWS The 33 rd Annual Sem
Page 62 and 63: INSTITUTE NEWS The 33 rd Annual Sem
Page 64 and 65: TRAVEL charm, has a loyal following
Page 66 and 67: TRAVEL lake’s waters. Although th
Page 68 and 69: PEN OFF focus more on the cost of c
Page 70 and 71: PEN OFF of frameworks, standards, a
Page 72:
with your ICPAK Smart Card ICPAK Sm
show all

The-Accountant-Jul-Aug-2017

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?