For Accounting Professionals and Students it is very much of relevance to know the DIFFERENCE BETWEEN MANAGEMENT AND THOSE CHARGED WITH GOVERNANCE (TCWG) in relation to SA-260 (Communication of audit matters to those charged with governance) in Standards on Auditing.
The clear cut definition of Management and Those charged with governance has remained the point of so much discussion as they were not clearly defined in the International Auditing Standards as well.
Some of the following definitions will help to know the meaning of both the term:
Management — Comprises of officers and others who also perform senior managerial functions. Management includes those charged with governance only in those instances when they perform such functions
Management means the person(s) responsible for achieving the objectives of the entity and who have the authority to establish policies and make decisions by which those objectives are to be pursued. Management is responsible for the ﬁnancial statements, including designing, implementing, and maintaining effective internal control over ﬁnancial reporting.
a) Accountability of the entity AND
b) Strategic direction of the entity
For Example: Various committees of Board of directors such as audit committee, share holders committee etc.
Management refers to those persons within the entity who are having the executive responsibility about code of conduct of the entity.
For example: Board of directors of the company.
If the above definitions are still too complicated to understand then remember the following:
Management means such personnel who are responsible to perform day to day functions of the business and are also responsible for making financial statements.
THOSE CHARGED WITH GOVERNANCE
|TCWG is also known as Policy Implementing body||Management is also known as Policy making Body|
|TCWG is lower than management.||Management is a higher body|
It should be noted that in respect of small entities like partnership firms, Both management and TCWG lies in same hands.
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