Describe the process of communicating audit findings to management and the audit committee, including the types of audit reports and the key considerations for determining the appropriate level of assurance.

Communicating audit findings to management and the audit committee is a crucial step in the audit process. This communication ensures that stakeholders are informed about the audit's scope, objectives, and results, enabling them to take appropriate actions to address any identified issues. The process typically involves several steps:

1. Planning and Preparation: Before communicating the findings, auditors must carefully plan and prepare the communication. This involves:
Identifying the audience: Determine the specific individuals or groups who need to receive the audit findings. This might include management, the audit committee, and other relevant stakeholders.
Defining the communication objectives: Clarify the purpose of the communication, such as informing, persuading, or recommending action.
Selecting the appropriate communication channels: Choose the most effective means of delivering the findings, such as formal reports, meetings, or informal discussions.
Organizing the information: Structure the findings in a clear and concise manner, using logical flow and appropriate language.

2. Developing the Audit Report: The audit report is a formal document that summarizes the audit findings, conclusions, and recommendations. There are different types of audit reports, each serving a specific purpose:
Management Letter: Provides a detailed analysis of the audit findings, including observations, recommendations, and corrective actions. It is primarily intended for management.
Audit Opinion: Expresses the auditor's professional opinion on the fairness of the financial statements. It is typically presented in the form of an unqualified, qualified, or adverse opinion.
Internal Control Report: Focuses on the adequacy and effectiveness of internal controls. It may include observations, recommendations, and an opinion on the effectiveness of internal control.

3. Delivering the Report: The audit report should be delivered to the appropriate stakeholders in a timely and professional manner. The delivery method might involve:
Formal presentation: Delivering the report in a face-to-face meeting with management and the audit committee, allowing for discussion and questions.
Written communication: Sending the report electronically or via mail, ensuring that it is received and reviewed by the intended recipients.
Combination of methods: Utilizing a combination of formal presentations and written communication to maximize the effectiveness of the communication process.

4. Following Up: After delivering the report, it is important to follow up with management and the audit committee to ensure that they understand the findings and are taking appropriate action. This might involve:
Meeting with management to discuss the findings in detail.
Requesting a written response from management outlining the corrective actions they will take.
Monitoring management's progress in implementing the recommendations.

The level of assurance provided by an audit is influenced by several factors:
Scope of the audit: The breadth and depth of the audit procedures performed.
Audit objectives: The specific objectives of the audit, which may vary depending on the nature of the engagement.
Materiality: The amount or significance of an error or omission that would affect the users' judgment.
Risk of material misstatement: The likelihood that a material misstatement exists in the financial statements.

For instance, a financial statement audit provides a high level of assurance, as it involves a thorough examination of the financial records and a professional opinion on the fairness of the financial statements. Conversely, an internal control audit may provide a lower level of assurance, as it focuses on the effectiveness of internal controls, not the accuracy of the financial statements.

The determination of the appropriate level of assurance should be based on a comprehensive assessment of the risks and objectives of the audit. The level of assurance provided by an audit is reflected in the auditor's opinion, which is expressed in the audit report.