Final answer:
The correct statement is that any significant matter communicated to those charged with governance should also be communicated to management, and it typically happens before the auditor's report is issued. The board of directors and the auditing firm are essential components of corporate governance. so, option c is the correct answer.
Step-by-step explanation:
The correct statement concerning an auditor's required communication with those charged with governance is c. Any significant matter communicated to those charged with governance also should be communicated to management. This communication often includes but is not limited to significant deficiencies in internal control, disagreements with management, and difficulties encountered during the audit. Communication should occur in a timely manner and is typically required to take place before the auditor's report on the financial statements is issued.
The board of directors, as the first line of corporate governance, plays a key role in overseeing management. The auditing firm, as a critical part of corporate governance, ensures that the financial records are accurate and provides confidence to shareholders and potential investors. However, as illustrated by the Lehman Brothers case, when corporate governance fails, it can lead to a lack of accurate financial information being available to investors.