Does the Auditor Tell Management or the Audit Committee?
Management runs the reporting process. Governance oversees management and the audit relationship.
Management
Management operates the company and receives communications about audit requests, proposed adjustments, operational control issues, and matters within management's responsibility.
Those charged with governance
The audit committee or equivalent oversees financial reporting, the auditor relationship, and management accountability.
Significant audit matters
Governance communication can include significant risks, accounting practices, difficulties, uncorrected misstatements, disagreements, and independence matters when applicable.
Control deficiencies
Severity affects whether a control issue must be communicated to management, governance, or both.
The takeaway
Communicate matters to the party responsible for acting on them, and escalate significant oversight matters to those charged with governance.
Related Summit guides
FAQ
Is the audit committee ordinarily management?
No.
Does the auditor communicate significant matters to governance?
Yes.
Can a control issue require governance communication?
Yes.