Post: ASIC consults on communicating audit review findings to directors

ASIC is seeking feedback on its proposals to change its approach to the communication of audit quality findings identified from ASIC’s review of audit files to the directors of the entities audited.

Consultation Paper 352 Communicating audit findings to directors, audit committees or senior managers (CP 352) outlines ASIC’s proposal to communicate the findings directly to directors on a routine basis rather than communicating findings on the current exception basis and the circumstances in which that would apply.

ASIC Commissioner Sean Hughes said, ‘Our proposal to communicate our audit review findings to directors of entities audited on a routine basis, rather than the current exception basis, will assist audit committees and directors to engage the auditor on the steps they are taking to address any issues and ensure that the audit is adequately resourced. This is important in supporting audit quality and broader market confidence in the quality of financial reports’.

CP 352 proposes that ASIC will routinely communicate findings from its review of audit files where ASIC:

has formed the view that an auditor has not obtained reasonable assurance that the entity’s financial report is free of material misstatement;
considers that audit work should be improved in future years, even though reasonable assurance was obtained that the financial report for the current year was free of material misstatement;
has concerns that the auditor did not meet the independence requirements of the Corporations Act (including professional requirements), has not addressed the matter, and has not adequately reported the matter in an auditor’s independence declaration; or
considers any other matter should be drawn to the attention of the directors or audit committee of the audited entity.
Submissions to CP 352 are invited by 11 February 2022.

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