#‎Audit‬ Updates

‪#‎SA260‬ says that it is related to communication of auditor with ‪#‎TCWG‬ and not with management. So SA 260 specifically guides what to communicate when to communicate with TCWG. Now in some organisations TCWG and management are same. They only work and they only supervise. So TCWG = Management. Then in such case are we still suppose to communicate, or management must be aware about all things, no need to have again communication??? Answer is as per SA 260 if both are same we have to do all communications as required by standard with Management only which is even TCWG. But communication is must we cannot ignore, even if both are same. Be careful, else it will lead to deviation from requirement of SA 260.

CA Ravi Taori

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Interesting Audit Update

As per SA we have to perform risk based audit that means where there is more risk then more audit efforts, we don’t treat all areas equally while selecting audit procedures.

Many researches has identified that revenue recognition is very sensitive area and it is prone to misstatement.

Hence when #SA240 was drafted, it is specifically mentioned in Para 26 that PRESUME that there will be risks (Not high risk just risks) in revenue recognition, so automatically we pay more attention to revenue recognition checking.

But this presumption is rebuttable that means if we have reason to justify no risk, then we can ignore this presumption and go for simple / limited audit procedures and we have to document reasons.

For example if company get revenue from single leasehold property and there is long term agreement for many years then there is no risk in revenue recognition of rent.

CA Ravi Taori

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