5B Shown below are extracts from the financial statement audit report of Australia Post with references to internal control highlighted.

Directors’ responsibility for the financial statements The Directors of the Australian Postal Corporation are responsible under the Public Governance, Performance and Accountability Act 2013 for the preparation and fair presentation of annual financial statements that comply with Australian Accounting and the rules made under that Act. The Directors are also responsible for such internal control as the directors determine necessary to enable the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. …

Auditor’s responsibilities for the audit of the financial statements …

As part of an audit in accordance with the Australian National Audit Office Auditing Standards, I exercise professional judgement and maintain professional scepticism throughout the audit. I also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for my opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. …

I communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that I identify during my audit. …

Excerpts from Australia Post, Annual Report 2020, pages 92–93 Based on the above extract of the audit report of Australia Post:

1 Who is responsible for the internal controls: directors or auditors?

2 Why is override of internal control important?

3 Does the auditor express an opinion on the effectiveness of internal control?

4 Are deficiencies in internal control formally communicated to directors?