Question

Which of the following matters is an auditor required to communicate to those charged with governance?

a. The basis for assessing control risk below the maximum.
b. The process used by management in formulating sensitive accounting estimates.
c. The auditor's preliminary judgments about materiality levels.
d. The justification for performing substantive procedures at interim dates.

Answer 1

Auditors are required to communicate the process used by management in formulating sensitive accounting estimates and the justification for performing substantive procedures at interim dates.

Step-by-step explanation:

Subject: Business

Grade: College

An auditor is required to communicate the following matters to those charged with governance: b. The process used by management in formulating sensitive accounting estimates. This includes discussing the methods and assumptions used by management to arrive at accounting estimates that may have a significant impact on the financial statements. The auditor should communicate any concerns or uncertainties regarding the estimates.

Additionally, the auditor should also communicate: d. The justification for performing substantive procedures at interim dates. This involves explaining the reasons for conducting substantive procedures at specific points in time before the completion of the audit. It helps those charged with governance to understand the timing of audit procedures and their rationale.

The other two options, a and c, are not matters that auditors are required to communicate to those charged with governance.