Essential Insights into SA 260: Strengthening Auditor-Governance Communication

This article provides a comprehensive overview of SA 260, focusing on the critical role of effective communication between auditors and Those Charged with Governance (TCWG). It highlights the importance of clear, timely, and two-way communication in enhancing audit quality and transparency. The discussion covers the auditor’s responsibilities, the scope and timing of communications, and the implications of inadequate engagement with TCWG. Practical insights are offered into key areas such as planning, identifying significant risks, and managing disagreements. The article also examines NFRA’s increased scrutiny of compliance with SA 260, underscoring its relevance in fostering strong auditor-governance relationships. This framework ultimately strengthens the reliability of financial reporting and protects stakeholders’ interests.

In auditing, communication between statutory auditors and ‘Those Charged With Governance’ (TCWG) has always been crucial. Recently, there has been a marked increase in the importance of the implementation of Standard Auditing (SA) 260 -"Communication with Those Charged with Governance," issued by the Institute of Chartered Accountants of India (ICAI), especially after the reports issued by the National Financial Reporting Authority (NFRA).

As a part of the overall improvement in audit quality, NFRA has recently commenced the release of t