An auditor is conducting an audit of a nonissuer's financial statements. The auditor identifies a significant deficiency in internal control that is NOT considered a material weakness. Which of the following communications is REQUIRED?

Answer options:

Communicate the significant deficiency in writing to management only.

Communicate the significant deficiency in writing to those charged with governance and management.

Communicate the significant deficiency orally to management and in writing to those charged with governance.

No communication is required since it is not a material weakness.

How to approach this question

Recall AU-C 265. Both Significant Deficiencies and Material Weaknesses must be communicated in writing to Management and Governance.

Full Answer

B.Communicate the significant deficiency in writing to those charged with governance and management.✓ Correct

AU-C 265 states that the auditor must communicate in writing to those charged with governance and management significant deficiencies and material weaknesses identified during the audit.

Common mistakes

Thinking only material weaknesses require communication; thinking oral communication is sufficient.

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