What does those charged with governance mean on the CPA exam?
Those charged with governance. The people responsible for overseeing the entity's strategic direction and its accountability, including the financial reporting process. Often the board or its audit committee.
Defined against AU-C 260.06.
Which CPA exam sections use those charged with governance?
Those charged with governance appears in the AUD section of the CPA exam.
Other terms defined against AU-C 260
- audit committee: A subcommittee of the board of directors that oversees financial reporting and the external audit.
- senior management: The people who direct and control the entity day to day, as distinct from those charged with governance, whose job is to oversee them.
Related terms
- control environment: The governance and management functions and the attitudes, awareness, and actions of those charged with governance and management concerning the entity's system of internal control.
- internal audit: An in-house function that evaluates controls and processes and reports to those charged with governance.
- significant deficiency: A deficiency, or combination of deficiencies, less severe than a material weakness but important enough to merit attention by those charged with governance.
- service organization: A third party whose processing affects a user entity's financial reporting, such as a payroll bureau or a claims processor.
- single audit: The combined financial statement and federal compliance audit required of an entity spending above a threshold in federal awards.
- Safeguards Rule: The FTC rule requiring financial institutions to maintain a written information security program with a named qualified individual responsible for it.