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 NFRA issues Draft Procedure for Submission of Audit Files
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 Standard on Internal Audit (SIA) 18, Related Parties
 Standard on Internal Audit (SIA) 17, Consideration of Laws and Regulations in an Internal Audit
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 Standard on Internal Audit (SIA) 12, Internal Control Evaluation
 Standard on Internal Audit (SIA) 11, Consideration of Fraud in an Internal Audit
  Standard on Internal Audit (SIA) 9, Communication with Management
  Standard on Internal Audit (SIA) 8, Terms of Internal Audit Engagement
 Standard on Internal Audit (SIA) 7, Quality Assurance in Internal Audit
 Standard on Internal Audit (SIA) 6, Analytical Procedures
 Standard on Internal Audit (SIA) 5, Sampling
 Standard on Internal Audit (SIA) 4, Reporting

Standard on Internal Audit (SIA) 9, Communication with Management
November, 28th 2018
              STANDARD ON INTERNAL AUDIT (SIA) 9
               COMMUNICATION WITH MANAGEMENT*

Contents
                                                                            Paragraph(s)
Introduction ............................................................................... 1-2
Matters to be Communicated ...............................................3-8
      The Internal Auditor's Responsibilities in
      Relation to the Terms of Engagement ............................... 3
      Planned Scope and Timing of the
     Internal Audit .................................................................4-7
      Significant Findings from the Internal Audit ....................... 8
The Communication Process ............................................. 9-15
      Establishing the Communication Process..................... 9-10
      Forms of Communication........................................... 11-12
      Timing of Communications ............................................. 13
      Adequacy of the Communication Process .................. 14-15
Documentation ..................................................................... 16
Effective Date....................................................................... 17

     The following is the text of the Standard on Internal Audit
     (SIA) 9, Communication with Management , issued by the
     Council of the Institute of Chartered Accountants of India.
     These Standards should be read in conjunction with the
     Preface to the Standards on Internal Audit, issued by the
     Institute.
     In terms of the decision of the Council of the Institute of
     Chartered Accountants of India taken at its 260 th meeting held
     in June 2006, the following Standard on Internal Audit shall be
     recommendatory in nature in the initial period. The Standards
     shall become mandatory from such date as notified by the
     Council.


*   Published in the January, 2009 issue of The Chartered Accountant .
Standard on Internal Audit (SIA) 9

Introduction
1.   This Standard on Internal Audit provides a framework for the internal
     auditor's communication with management and identifies some specific
     matters to be communicated with the management as described in the
     terms of the engagement.

2.   The internal auditor while performing audit should :

     a.    Communicate clearly the responsibilities of the internal auditor,
           and an overview of the planned scope and timing of the audit
           with the management;

     b.    Obtain information relevant to the internal audit from the
           management;

     c.    Provide timely observations arising from the internal audit that
           are significant and relevant to their responsibility as described
           in the scope of the engagement to the management; and

     d.    Promote effective two-way communication between the internal
           auditor and the management.

Matters to be Communicated
The Internal Auditor's Responsibilities in Relation to the Terms of
Engagement

3.   The internal auditor is responsible for performing the internal audit in
     accordance with the terms of engagement.

Planned Scope and Timing of the Internal Audit

4.   Communication regarding the planned scope and timing of the internal
     audit may:

     a.    Assist the management:

               to understand better the objectives of the internal auditor's
               work;


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                                    Communication with Management

                 to discuss issues of risk and materiality with the internal auditor;
                 and

                 to identify any areas in which they may request the internal
                 auditor to undertake additional procedures;

     b.     Assist the internal auditor to understand better the entity and its
            environment.

5.   When communicating to management about planned scope and timing of
     the internal audit, the internal auditor would need to ensure that such
     communication does not reduce the effectiveness of internal audit. For
     example, communicating the nature and timing of detailed audit
     procedures may make those procedures predictable.






6.   Matters communicated may include:

            How the internal auditor proposes to address the significant risks of
            material misstatement, whether due to fraud or error.

            The internal auditor's approach to internal control relevant to the
            internal audit.

            The application of materiality in the context of an internal audit.

7.   Communication with management may assist the internal auditor to plan
     the scope and timing of the internal audit. It does not, however, change
     the internal auditor's sole responsibility to establish the overall internal
     audit strategy and the internal audit plan, including the nature, timing and
     extent of procedures necessary to obtain sufficient appropriate audit
     evidence.

Significant Findings from the Internal Audit

8.   Paragraph 25 of the Standard on Internal Audit (SIA) 4, "Reporting", states:

     "25. The internal audit report contains the observations and comments of
     the internal auditor, presents the audit findings, and discusses
     recommendations for improvements. To facilitate communication and
     ensure that the recommendations presented in the final report are practical
     from the point of view of implementation, the internal auditor should

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Standard on Internal Audit (SIA) 9

     discuss the draft with the entity's management prior to issuing the final
     report. The different stages of communication and discussion should
     be as under:

     Discussion Draft - At the conclusion of fieldwork, the internal auditor
     should draft the report after thoroughly reviewing his working papers
     and the discussion draft before it is presented to the entity's
     management for auditee's comments. This discussion draft should be
     submitted to the entity management for their review before the exit
     meeting.

     Exit Meeting - The internal auditor should discuss with the
     management of the entity regarding the findings, observations,
     recommendations, and text of the discussion draft. At this meeting,
     the entity's management should comment on the draft and the
     internal audit team should work to achieve consensus and reach an
     agreement on the internal audit findings.

     Formal Draft - The internal auditor should then prepare a formal draft,
     taking into account any revision or modification resulting from the
     exit meeting and other discussions. When the changes have been
     reviewed by the internal auditor and the entity management, the final
     report should be issued.

     Final Report - The internal auditor should submit the final report to
     the appointing authority or such members of management, as
     directed. The periodicity of the Report should be as agreed in the
     scope of the internal audit engagement. The internal auditor should
     mention in the Report, the dates of discussion draft, exit meeting,
     Formal Draft and Final Report."

The Communication Process
Establishing the Communication Process

9.   Clear communication of the internal auditor's responsibilities, the planned
     scope and timing of the internal audit, and the expected general content of
     communications helps establishing the basis for effective two-way
     communication.

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                                    Communication with Management

10.   Matters that contribute to effective two-way communication include:

          Clarity in the purpose of communications which makes the internal
          auditor and the management better placed to have a mutual
          understanding of relevant issues and the expected actions arising
          from the communication process.

          Clarity in the form in which communications will be made.

          Identifying the person(s) in the internal audit team and the
          management who will be responsible for communicating particular
          matters.

          The internal auditor's expectation that communication will be two-way,
          and that the management will communicate with the internal auditor,
          matters they consider relevant to the internal audit, for example,
          strategic decisions that may significantly affect the nature, timing and
          extent of internal audit procedures, the suspicion or the detection of
          fraud, and concerns with the integrity or competence of senior
          management.

          The process for taking action and reporting back on matters
          communicated by the internal auditor and the management.

Forms of Communication

11.   Effective communication may involve structured presentations and written
      reports as well as less structured communications, including discussions.
      The internal auditor may communicate matters other than those described
      in the terms of engagement, either orally or in writing.

12.   In addition to the significance of a particular matter, the form of
      communication (e.g., whether to communicate orally or in writing, the
      extent of detail or summarization in the communication, and whether to
      communicate in a structured or unstructured manner) may be affected by
      such factors as:

      a. Whether the matter has been satisfactorily resolved.

      b. Whether management has previously communicated the matter.

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Standard on Internal Audit (SIA) 9

      c. The size, operating structure, control environment, and legal structure
         of the entity.

      d. In the case of an internal audit of a specific aspect of an operation,
         whether the internal auditor also audits the entire operation or the
         entity.

      e. The expectations of the management, including arrangements made
         for periodic meetings or communications with the auditor.

      f.   The amount of ongoing contact and dialogue the internal auditor has
           with the management.

      g. Whether there have been significant changes in the membership of a
         governing body.

Timing of Communications






13.   The appropriate timing for communications will vary with the
      circumstances of the engagement. Relevant circumstances include the
      significance and nature of the matter, and the action expected to be taken
      by the management. For example:

           Communications regarding planning matters may often be made early
           in the audit engagement.

           It may be appropriate to communicate a significant difficulty
           encountered during the internal audit as soon as practicable.

           Similarly, it may be appropriate to communicate material weaknesses
           in the design, implementation or operating effectiveness of internal
           control that have come to the internal auditor's attention as soon as
           practicable.

           Communications regarding independence may be appropriate
           whenever significant judgments are made about threats to
           independence and related safeguards.

           The exit meeting may also be an appropriate time to communicate
           findings from the internal audit.


                                       6
                                    Communication with Management

Adequacy of the Communication Process

14.   The internal auditor need not design specific procedures to support the
      evaluation of the two-way communication with the management, rather,
      that evaluation may be based on observations resulting from audit
      procedures performed for other purposes. Such observations may include:

          The appropriateness and timeliness of actions taken by the
          management in response to matters raised by the internal auditor.
          Where significant matters raised in previous communications have
          not been dealt with effectively, it may be appropriate for the internal
          auditor to inquire as to why appropriate action has not been taken,
          and to consider raising the point again. This avoids the risk of giving
          an impression that the internal auditor is satisfied that the matter has
          been adequately addressed or is no longer significant.

          The apparent openness of the management in their communications
          with the internal auditor.

          The apparent ability of the management to fully comprehend matters
          raised by the internal auditor, for example, the extent to which the
          management probes issues and questions recommendations made to
          them.

          Difficulty in establishing the management, a mutual understanding of
          the form, timing and expected general content of communications.

          Whether the two-way communication between the internal auditor and
          the management meets applicable legal and regulatory requirements.

15.   Inadequate two-way communication may indicate an unsatisfactory control
      environment and influence the internal auditor's assessment of the risks of
      material misstatements. There is also a risk that the internal auditor may
      not have obtained sufficient appropriate internal audit evidence to support
      his findings or opinion.

Documentation
16.   Where matters required by this SIA to be communicated are
      communicated orally, the internal auditor shall document them, and when

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Standard on Internal Audit (SIA) 9

      and to whom they were communicated. Where matters have been
      communicated in writing, the auditor shall retain a copy of the
      communication as part of the internal audit documentation.

Effective Date
17.   This Standard on Internal Audit is effective for all internal audits beginning
      on or after _____________. Earlier application of the Standard is
      encouraged.




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