Communication With Governance Practice Test

You are the auditor of a nonissuer manufacturing company in a financial statement audit. During interim testing, you identify that the controller both sets up new vendors and approves vendor master changes, and you note two instances where vendor bank account changes were processed without independent review; management states the process is efficient and does not plan to change it. The audit is otherwise on schedule and you plan to rely on controls over disbursements. What is the auditor's responsibility in communicating this issue?

You are the auditor of a nonissuer in a financial statement audit. Near the end of fieldwork, management informs you that a warehouse fire occurred after year-end but before the auditor’s report date; management believes the event is immaterial and does not want to inform the board until insurance proceeds are finalized. You determine the event is a significant subsequent event requiring consideration of disclosure and potentially affects the audit timeline. What is the auditor's responsibility in communicating this issue?