ACCA Advanced Audit and Assurance (AAA) Practice Exam

Which ISA provides guidance on communicating with those charged with governance?

1. ISA 240

2. ISA 250

3. ISA 260

4. ISA 210

The correct answer is: ISA 260

ISA 260, "Communication with Those Charged with Governance," specifically outlines the auditor's responsibilities regarding communication with an entity's governance structure. This standard highlights the importance of understanding the role of those charged with governance and sets the framework for the auditor to share relevant information during the audit process. The guidance provided in ISA 260 includes details on the matters that need to be communicated, such as the auditor's responsibilities, significant findings from the audit, and any significant difficulties encountered. Effective communication is vital to ensure that those charged with governance are informed of the auditor's perspective on the financial statements and any issues that may need their attention, thus enhancing the overall governance of the entity. Additionally, this standard emphasizes the need for timely communication to allow for appropriate action or decision-making by those charged with governance. This standard plays a crucial role in ensuring transparency and accountability in the relationship between the auditors and the governance structure, reinforcing the integrity of the audit process.