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6. Commti�ni�atior� with audit committees A. Comm��«icatipz� of reportable conditions Auditing standards require reportable conditions to be communicated to the audit committee. The communicationmay take place ati�� the audit is concluded or during the audit if timely communication is important. The relative significance of the matters or the urgency of corrective follow-up action may influence the auditor's decision on when to communicate the conditions. The auditor need not communicate reportable conditions of which the audit committee is aware and has acknowledged its understanding of the as4ociated risks. B. Comm��riicatio�n abouf �'rn �i� and illegal acts t ff�ve determine there is evidence fraud may e�st (even if the matter is inconsequential) auditing standards require us to report it to the appropriate level of management. If the frt7�iil or potential fraud involves senior managementor causes the financial statements to be materially misstated, it will be reported directly to the audit committee. We are required to reach an understandingwith the audit committee about the nature and ea-tent o�l' c�>�nrxau��ot�tio� eapected about immaterial fraud not involving senior management (such as misappropriationscommitted by lower level employees). In the absence of such �� a�}��ment, w� should report all instances of fraud to both the appropriate level of managementand the auditcommittee. C. Co��rninication of other information �'��' ��; � s matters which are required to be communicated to the audit committee will be i•�� ?��k�j in our management report and include the following: • Auditor responsibility The level of responsibility the auditor assumes for an audit performed in accordance with generally accepted auditing standards and the nature of the assurance an audit pcovidcs. • Accounting policies The initial selection of and changes in significant policies or their application, methods �tsed to account for significant unusual t�'ansactians, and the effect of significant accountingpolicies in controversial or emerging areas. . i�;sti�aa#�� The process management uses to formulate particularly sensihve accounhng estimates and the basis for the auditor's conclusions about the reasonableness of those estimates. � Ad��fstrnents ��:t� ,��r�;�� ,��, xr ��r�� ;� s�� t Fri7�� r�t%��Lvtf rr rfti�` ��i��u=�! statt-rnents Ers� 4hrr�� thet �dt!'� � In �dd�l� auditors are required to inform the audit committee about uncorrected misstatements that management has concluded are not material to the financial statements. • Ot�he�` information