ISA 260 Communications of Audit Matters with Those Charged with Governance. The standard requires auditors to communicate, on a timely basis, matters of governance interest to those with the governance of an entity.

This rather obscure form of words means that auditors should communicate to management matters such as the following:

  1. The general approach and overall scope of audit, including any expected limitations thereon, or any additional requirements.

  2. The selection of, or changes in, significant accounting polices and practices that have, or could have, a material effect on the entity’s financial statements.

  3. The potential effect on the financial statements of any significant risks and exposures, such as pending litigation, that are required to be disclosed in the financial statements.

  4. Audit adjustments, whether or not recorded by the entity, that have or could have significant effect on the entity’s ability to continue as a going concern.

  5. Material uncertainties related to events and conditions that may cast sufficient doubt on the entity’s ability to a continue as a going concern.

  6. Disagreement with management about matters that, individually or in aggregate, could be significant to the entity’s financial statements or the auditor’s report. This communication includes consideration of whether the matter has, or has not, been resolved, and the significance of the matter.

  7. Expected modifications to the auditor’s report.

  8. Other matters, such as material weakness in internal control, questions regarding management integrity and fraud involving management.

  9. Any other matters agreed upon in the terms of the engagement.