What improvement can improve auditor and management relations?

Clarifying responsibilities in engagement letters is crucial for enhancing auditor and management relations. Engagement letters serve as formal agreements that outline the scope of the audit, the responsibilities of both the auditor and the management, and the expectations regarding the audit process. By explicitly defining these responsibilities, both parties have a clear understanding of their roles, which fosters transparency and reduces misunderstandings.

When responsibilities are well articulated, it allows for more effective communication throughout the audit process. Management is informed about what is required of them, and auditors are clear about their obligations in conducting the audit. This can lead to a more cooperative relationship where both parties feel respected and aligned towards a common goal. Additionally, it helps in mitigating potential conflicts that could arise from assumptions or ambiguity regarding roles and responsibilities.

In contrast, ignoring audit committee communications and avoiding explanations in the audit report can lead to a breakdown in trust and credibility. Similarly, minimizing audit scope may compromise the quality of the audit and could raise concerns from management about the thoroughness of the auditor's work. Therefore, clarifying responsibilities is a fundamental step in building a positive and productive relationship between auditors and management.