A5 - Internal Control Communications

Question 1

In reporting on a nonissuer’s internal control over financial reporting in an attest engagement, a practitioner should include a paragraph that describes what?

Answer 1

The inherent limitations of any internal control

Question 2

T/F: Auditors must communicate significant deficiencies to management but not to those charged with governance

Answer 2

False; they must be communicated to both management and those charged with governance

Question 3

What describes an auditor’s obligation to identify deficiencies in the design or operation of internal control in a financial statement audit of a nonissuer?

Answer 3

The auditor should not search them out, but should document and communicate any discovered

Question 4

What type of opinion should be issued for an attest engagement concerning a nonissuer’s internal control when there is a material weakness?

Answer 4

An adverse opinion

Question 5

T/F: All auditors must follow PCAOB standards surrounding internal control

Answer 5

False; PCAOB standards surrounding internal control apply only to audits of issuers

Question 6

T/F: An auditor is always required to communicate significant deficiencies to management

Answer 6

True

Question 7

T/F: An auditor should communicate previously existing significant deficiencies

Answer 7

True; always in writing

Question 8

T/F: Management is not required to provide any assurance about material weaknesses in internal controls

Answer 8

True; they are only responsible for providing a statement of effectiveness of internal controls