media release (16-234MR)

ASIC consults on communicating audit findings to directors, audit committees or senior managers

Published 25 July 2016

ASIC today released a consultation paper about it directly communicating specific financial reporting and audit findings identified from ASIC reviews of external audit files to directors, audit committees or senior managers of companies, responsible entities or disclosing entities.

‘We are consulting about reporting the most significant findings from our reviews of audit files to assist audit committees and directors in supporting audit quality, which is important to market confidence in the quality of financial reports’, said ASIC Commissioner John Price.

The consultation paper also seeks feedback on whether ASIC should directly advise the board of directors of all audited entities if their audit files have been selected for review by ASIC as part of our routine audit firm inspections. This information would enable audit committees to ask the auditor for the results from ASIC’s audit inspections and assist directors in promoting audit quality.

Comments on the proposals in Consultation Paper 265 Communicating audit findings to directors, audit committees or senior managers (CP 265) are due by 30 September 2016.

Download:

Consultation Paper 265, Communicating audit findings to directors, audit committees or senior managers (CP 265)
Information Sheet 196, Audit quality: The role of directors and audit committees (INFO 196)

Background

The Australian Securities and Investments Commission Act 2001 (the ASIC Act) was amended in 2012 to allow ASIC to directly communicate specific financial reporting and audit findings identified from reviews of audit files to directors, audit committees or senior managers of companies, responsible entities or disclosing entities to assist the entity to properly manage its affairs.

INFO 196 provides more information on the ways in which directors and audit committees can support audit quality.

As a matter of general practice, we understand that the largest six audit firms already inform directors where we will be reviewing audit files related to the entity. We encourage audit committees to ask audit firms for the results of our reviews of an entity’s audit files.