Communicating and discussing accounting issues with statutory auditors is important to avoid any potential misunderstandings. I say misunderstandings because, one of the major reasons for the auditor
auditee conflict is inadequate communciation. Infact as a result of
Section 404 the communciations between auditors and clients has decreased. The auditors should also discuss and exchange views with
management on a periodic basis.

There is nothing wrong in such interactions which are used to discuss
accounting as well as process issues. The final call in terms of
accounting issues should be of the management. Management should make
sure that it provides auditors with financial statements even if they
are in a draft stage. This will help the auditor determine if a
deficiency exists. The deficiency may be as a result of process flaws
or incorrect accounting etc. Most management personnel agree that the
earlier we communicate with auditors about potential deficiencies,
the more time we get to devise a remediation plan for the same. With
the new AS 5, communication with auditors would be more important
than ever.

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