What must be communicated to governance if non-audit services are provided?

What must be communicated to governance if non-audit services are provided?

• A. Potential revenue from non-audit services
• B. Any matters affecting objectivity and independence
• C. Client satisfaction surveys and feedback
• D. Future business strategy and risks

Answer: (B)

When providing non-audit services, it is vital for auditors to maintain objectivity and independence to uphold the integrity of the audit process. Communicating any matters that might affect these qualities directly addresses the potential risks involved when an auditor takes on additional roles beyond the audit. Governance, such as the audit committee or board of directors, needs to be informed about any circumstances that could compromise the auditor's ability to act with impartiality. This includes understanding any relationships or circumstances that could lead to a perceived or actual conflict of interest. Transparency in this area is essential to maintain trust and ensure that the soundness of the financial statements is not compromised. The other options, while relevant to the overall context of auditor-client relationships, do not directly address the critical issues of objectivity and independence that must be communicated for proper governance and oversight. Potential revenue from non-audit services might be of interest for financial planning, but it does not pertain to the ethical considerations regarding independence. Similarly, feedback and surveys about client satisfaction, as well as discussions about future business strategy and risks, can provide useful insights but are not fundamental to maintaining the integrity of the audit process.

When providing non-audit services, it is vital for auditors to maintain objectivity and independence to uphold the integrity of the audit process. Communicating any matters that might affect these qualities directly addresses the potential risks involved when an auditor takes on additional roles beyond the audit.

Governance, such as the audit committee or board of directors, needs to be informed about any circumstances that could compromise the auditor's ability to act with impartiality. This includes understanding any relationships or circumstances that could lead to a perceived or actual conflict of interest. Transparency in this area is essential to maintain trust and ensure that the soundness of the financial statements is not compromised.

The other options, while relevant to the overall context of auditor-client relationships, do not directly address the critical issues of objectivity and independence that must be communicated for proper governance and oversight. Potential revenue from non-audit services might be of interest for financial planning, but it does not pertain to the ethical considerations regarding independence. Similarly, feedback and surveys about client satisfaction, as well as discussions about future business strategy and risks, can provide useful insights but are not fundamental to maintaining the integrity of the audit process.