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Written communications with management - Q&A

Written communications with management and those charged with governance are not always straightforward. Do auditors always know exactly who they should be writing to and do the recipients always understand what they are sent? John Selwood has the answers.

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Q: As auditor, at the end of the audit I sent the CEO of the company my management letter, containing details of significant matters discussed with management during the audit. It transpires that the management letter was not distributed to all the directors of the company. One of the non-executive directors has complained that I should have sent the letter to each director individually. Is this correct?

A: It is useful to be clear that what is often called a ‘management letter’ is actually a communication with those charged with governance. That is not the same as management. Personally, I do not have a problem with calling this communication a ‘management letter’, but the auditor should remember to think about who the communication is to.

In the case of UK companies, those charged with governance tend to be the directors, whether they are executive or non-executive. ISA 260 communication with those charged with governance, does not specify that a copy of any written communication with those charged with governance needs to be sent to each director.

The ISA is a little vague on this matter as it has to deal with many jurisdictions with different governance structures. But as the very first requirement of the ISA is to determine the appropriate person(s) with whom to communicate, it does require the auditor to identify the right person or people before doing anything else...

This is an extract from an article in the October 2013 edition of Audit & Beyond, the magazine of the Audit and Assurance Faculty.

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