AA – Nov 2017 – L2 – Q2c – Audit and Assurance Evidence

State three items to be included in a management letter according to ISA 265.

Question

ISA 265 Communication of deficiencies in internal control to management and those charged with governance specifies control deficiencies that must be communicated to those charged with governance and management.

Required:
State three items to be captured in a management letter.

Answer

Deficiencies identified: A detailed description of the control deficiencies discovered during the audit process.
Implications of the deficiencies: An explanation of the potential risks or consequences that could arise due to the identified deficiencies.
Recommendations for improvement: Suggestions on how to address the identified deficiencies and improve the internal control environment.

(3 points @ 1 mark each = 3 marks)