ISA 260 (Revised) — Communication with Those Charged with Governance

ISA 260 (Revised) DEALS with the auditor’s responsibility to COMMUNICATE with those charged with governance in an ‘Audit‘ of Financial Statements.

ISA 260 (Revised) – Introduction

1. Scope of this ISA

It does NOT establish Requirements regarding the auditor’s communication with an entity’s Management or owners unless they are also charged with a governance role.

2. Effective Date

This ISA is EFFECTIVE for audits of financial statements for periods ending on or after December 15, 2016.

ISA 260

ISA 260 – Objectives

The Objective(s) of the ‘Auditor’ are:

  • To communicate clearly the responsibilities of the auditor and an overview of the planned scope and timing of the audit;
  • To obtain information relevant to the audit;
  • To provide with timely observations arising from the audit that are significant and relevant; AND
  • To promote effective two-way communication between the auditor and those charged with governance.

ISA 260 – Definitions

1. Those Charged with Governance

The person(s) or organization(s) with Responsibility for overseeing the strategic direction of the entity and obligations related to the accountability of the entity.

2. Management

The person(s) with Executive Responsibility for the conduct of the entity’s operations.

ISA 260 – Requirements

1. Those Charged with Governance

The ‘Auditor’ shall DETERMINE the appropriate person(s) within the entity’s governance structure with whom to communicate.

1.1 Communication with a Subgroup of Those Charged with Governance

The ‘Auditor’ shall DETERMINE the need to communicate to governing body alongside subgroup For Example, an audit committee, or an individual.

1.2 When All of Those Charged with Governance Are Involved in Managing the Entity

The ‘Auditor’ shall nonetheless be SATISFIED that communication with person(s) with Management responsibilities adequately informs all of those with whom the auditor would otherwise communicate in their governance capacity.

2. Matters to be Communicated

2.1 The Auditor’s Responsibilities in Relation to the Financial Statement Audit

The ‘Auditor’ shall COMMUNICATE that:

  • The auditor is responsible for forming and expressing an opinion on the financial statements; AND
  • The audit does not relieve Management or those charged with governance of their responsibilities.

2.2 Planned Scope and Timing of the Audit

The ‘Auditor’ shall COMMUNICATE an ‘Overview‘ of the planned scope and timing of the audit which includes significant risks.

2.3 Significant Findings from the Audit

The ‘Auditor’ shall COMMUNICATE:

(a) The auditor’s views about significant qualitative aspects of the entity’s Accounting Practices, Including Accounting Policies, Accounting Estimates and ‘Financial Statement’ Disclosures.
(b) Significant difficulties, if any encountered during the audit.
(c) Unless all those charged with governance are involved in Managing the entity:
Significant Matters that were discussed or subject to correspondence with Management; AND
Written representations that the auditor is requesting.
(d) Circumstances that affect the form and content of the auditor’s report.
(e) Any other significant Matters relevant to the oversight of the financial reporting process.

2.4 Auditor Independence

In the case of ‘Listed Entities’, the auditor shall COMMUNICATE:

  • All relationships and other Matters between the firm, network firms may reasonably be thought to bear on independence; AND
  • The related safeguards applied to eliminate identified threats to independence or reduce them to an acceptable level.

3. The Communication Process

3.1 Establishing the Communication Process

The ‘Auditor’ shall COMMUNICATE the form, timing and expected general content of communications.

3.2 Forms of Communication

The ‘Auditor’ shall COMMUNICATE in writing regarding significant findings from the audit if oral communication would not be adequate.

The auditor shall COMMUNICATE in writing regarding Auditor Independence.

3.3 Timing of Communications

The ‘Auditor’ shall COMMUNICATE on a timely basis.

3.4 Adequacy of the Communication Process

The ‘Auditor’ shall EVALUATE whether the two-way communication has been adequate for the purposes of the audit.

4. Documentation

When Matters required by ISA 260 are communicated ‘Orally’, the auditor shall INCLUDE them in the audit documentation.

Where Matters have been Communicated in ‘Writing’, the auditor shall RETAIN a copy of the communication as part of the audit documentation.


ISA 260Communication with Those Charged with Governance‘ DEALS with the auditor’s responsibility to communicate with those charged with governance in an ‘Audit‘ of Financial Statements.

[200-299] General Principles and Responsibilities

ISA 200

ISA 210

ISA 220

ISA 230

ISA 240

ISA 250

ISA 265

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