SA 265 issued by icai

Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 prashant soni asked over 3 years ago

explain me about SA 265 in short.

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3 Answers
Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 CA Sandeep Bohra answered about 3 years ago

> SA 265: Communicating Deficiencies in Internal Control to those Charged with Governance and Management Scope -SA 265 deals with the auditor’s responsibility to communicate appropriately to those charged with governance and management deficiencies in internal control that the auditor has identified in an audit of financial statements -The auditor is required to obtain an understanding of internal control relevant to the audit when identifying and assessing the risks of material misstatement. -In making those risk assessments, the auditor considers internal control in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of internal control. -The auditor may identify deficiencies in internal control not only during this risk assessment process but also at any other stage of the audit. Objective - The objective of the auditor is to communicate appropriately to those charged with governance and management deficiencies in internal control that the auditor has identified during the audit and that, in the auditor’s professional judgment, are of sufficient importance to merit their respective attention sent importance to merit their respective attentions. auditor has identified during the audit and that, in the auditor’s professional Requirements -The auditor shall determine whether, on the basis of the audit work performed,the auditor has identified one or more deficiencies in internal control -If the auditor has identified one or more deficiencies in internal control, the auditor shall determine, on the basis of the audit work performed, whether, individually or in combination, they constitute significant deficiencies -The auditor shall communicate in writing significant deficiencies in internal control identified during the audit to those charged with governance on a timely basis. -The auditor shall also communicate to management at an appropriate level of responsibility on a timely basis: (a) In writing, significant deficiencies in internal control that the auditor has communicated or intends to communicate to those charged with governance, unless it would be inappropriate to communicate directly to management in the circumstances; and (b) Other deficiencies in internal control identified during the audit that have not been communicated to management by other parties and that, in the auditor’s professional judgment, are of sufficient importance to merit management’s attention. -The auditor shall include in the written communication of significant deficiencies in internal control: (a) A description of the deficiencies and an explanation of their potential effects; and (b) Sufficient information to enable those charged with governance and management to understand the context of the communication **Examples of matters that the auditor may consider in determining whether a deficiency or combination of deficiencies in internal control constitutes a significant deficiency include:** • The likelihood of the deficiencies leading to material misstatements in the financial statements in the future. • The susceptibility to loss or fraud of the related asset or liability. • The subjectivity and complexity of determining estimated amounts, such as fair value accounting estimates. • The financial statement amounts exposed to the deficiencies. • The volume of activity that has occurred or could occur in the account balance or class of transactions exposed to the deficiency or deficiencies. The importance of the controls to the financial reporting process; for example: o General monitoring controls (such as oversight of management). o Controls over the prevention and detection of fraud. o Controls over the selection and application of significant accounting policies. o Controls over significant transactions with related parties. o Controls over significant transactions outside the entity’s normal course of business. o Controls over the period-end financial reporting process (such as controls over non-recurring journal entries). • The cause and frequency of the exceptions detected as a result of the deficiencies in the controls. • The interaction of the deficiency with other deficiencies in internal control

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Data?1494421730 rohit awasthi answered over 3 years ago

Dear friend > SA – 265 Communication deficiencies in internal control to those > charges charged with governance and Management. Objective of Standard  To communicate appropriately the deficiencies in internal control that the auditor has identified during the audit and are sufficient to merit attention of those charge with governance. Requirements Whether deficiencies constitute significant deficiencies Those should be reported on timely basis Should be reported in writing along with their potential effects Indicators of Significant Deficiencies Evidences of --Ineffective aspects of control environment --Absence of risk assessment process within the entity --Ineffective response to significant risks --Misstatement not prevented or detected Indicators of Significant Deficiencies Evidences of --Ineffective aspects of control environment --Absence of risk assessment process within the entity --Ineffective response to significant risks --Misstatement not prevented or detected thanks

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Open uri20170510 32134 s5bvk0?1494421637 ARJUN PRATAP SINGH answered over 3 years ago

Dear Soni full name of SA 265 is **SA 265: Communicating Deficiencies in Internal Control to those Charged with Governance and Management** and this SA is Supplement of SA 260 i.e. Communication with those Charged with Governance and the Matter of SA 265 is as follow... The objective of the auditor is to communicate appropriately to those charged with governance and management deficiencies in internal control that the auditor has identified during the audit and that, in the auditor’s professional judgment, are of sufficient importance to merit their respective attentions. and The auditor shall determine whether, on the basis of the audit work performed, the auditor has identified one or more deficiencies in internal control. If the auditor has identified one or more deficiencies in internal control, the auditor shall determine, on the basis of the audit work performed, whether, individually or in combination, they constitute significant deficiencies. Regards, Arjun

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