ISA 265 – Communicating Deficiencies in Internal Control to Those Charged with Governance and Management


ISA 265 gives instructions on how auditor needs to convey the deficiencies found in the internal control system. This has been one highly debated area once as it was thought it falls under auditor’s responsibility to evaluate internal control system. ISA 265 cleared the misconceptions and also help understand what real responsibilities of auditors are in this context.

Executive Summary

ISA 265 requires auditor to convey deficiencies identified by the auditor in the course of the audit to appropriate level of management and to those charged with governance. Communication needs to be written if it is about significant deficiencies but what is what significant deficiencies is left on auditor’s judgment which he applies considering number of factors. Content of communication depends on the nature of deficiency, size and complexity of entity and number of connected factors. However, auditor need not to make written communication for deficiencies other than significant deficiencies.