Subsection 2: Certification of accounts

The professional practice standard relating to the communication of internal control weaknesses, approved by the Minister of Justice, is shown below:

COMMUNICATION OF INTERNAL CONTROL WEAKNESSES

Introduction

1. When obtaining an understanding of the entity, including its internal control, in accordance with the professional practice standard on understanding the entity and its environment and assessing the risks of material misstatement, and throughout the audit, the statutory auditor may identify internal control weaknesses. These weaknesses are weaknesses in internal control related to accounting and financial reporting which are characterised by:

- the absence of a control necessary to prevent, detect or correct misstatements in the accounts; or

- the inability of a control to prevent, detect or correct misstatements in the accounts due to its design, implementation or operation.

2. A material weakness in internal control is a weakness or set of weaknesses in internal control related to accounting and financial reporting that is sufficiently important to merit the attention of the collegiate body responsible for administration or the body responsible for management and the supervisory body, as well as, where applicable, the specialised committee.

3. When applying the standard of professional practice relating to the audit procedures implemented following the risk assessment, the statutory auditor assesses the effectiveness of the controls relevant to the audit when it has decided to rely on these controls or when it considers that substantive controls alone are not sufficient. Thus, the audit procedures performed by the statutory auditor are not intended to express an opinion on the effectiveness of internal control.

4. The purpose of this standard is to define the procedures for the communication by the statutory auditor of internal control weaknesses that it has identified.

Addressees and form of communication

5. At such times as the statutory auditor considers appropriate, the statutory auditor shall communicate to management, at the appropriate level of responsibility, those internal control weaknesses identified during the audit which the statutory auditor considers to be of sufficient importance to merit management's attention, unless the statutory auditor considers such action inappropriate in the circumstances.

He makes this communication in writing when it concerns weaknesses that he considers significant.

6. The statutory auditor shall communicate material weaknesses in internal control to the bodies referred to in Article L. 823-16, at the time it deems appropriate, in writing.

Content of the written communication of material weaknesses in internal control

7. The written communication of material weaknesses in internal control includes:

- a description of the material weaknesses in internal control and their potential effects on the accounts;

- information on the scope and limits of this communication. In particular, this information recalls that:

- the objective of the audit is to formulate an opinion on the accounts;

- the statutory auditor takes cognisance of the elements of internal control relevant to the audit in order to consider the factors that may give rise to risks of material misstatement in the accounts and not for the purpose of formulating an opinion on the effectiveness of internal control.

Only material weaknesses in internal control that it has identified in the course of the audit are communicated.