An auditor is performing an audit of a nonissuer. The auditor identifies a significant deficiency in internal control. Which of the following is TRUE regarding the auditor's communication responsibility?

Answer options:

The auditor must communicate the deficiency to the public in the audit report.

The auditor must communicate the deficiency in writing to those charged with governance.

The auditor is not required to communicate significant deficiencies, only material weaknesses.

The communication must be made prior to the report release date.

How to approach this question

Significant Deficiency = Private Note to Governance. Material Weakness (in Integrated Audit) = Public Report. Both = Written.

Full Answer

B.The auditor must communicate the deficiency in writing to those charged with governance.✓ Correct

Significant deficiencies and material weaknesses must be communicated in writing to management and those charged with governance. Unlike an integrated audit of an issuer, significant deficiencies are not reported in the auditor's report on financial statements.

Common mistakes

Thinking significant deficiencies go in the audit report.

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