Audit #4 Flashcards
What is the difference between a deficiency in a controls design/operation?
Design - This occurs when a needed control has not been put in place, or a control that has been put in place is not designed to mitigate the corresponding risk?
Operating - This occurs when a well designed control is not operating as designed or the individual responsible for performing the control lacks the authority or ability to perform it effectively.
What elements are required in an auditors report of an issuer’s internal controls?
- Title (Name of Accounting Firm)
- Addressing audience (Stockholders / Board of Directors)
- Sections Reflecting
- Company Name / Audit Opinion
- Basis for Opinion
- Definition and limitation of ICFR - Audit Firm Signiture
- City/State
- Date
True or False
The Materiality threshold used for evaluating I/C should be different that the one used for evaluating the financial statements?
False
True or False
Before expressing an ICFR opinion, the auditor must obtain reasonable assurance about whether material weaknesses exist, not whether those weaknesses have created financial misstatements.
True
Is an examination of internal control more limited or extensive than an assessment of Risk of Material Misstatement?
In the assessment of RMM, the auditor will only test those controls that are expected to be relied upon, more limited in scope than an examination of internal control, not the other way around.
The letter issued by the auditor addressing internal control–related matters observed during a nonissuer financial statement audit should include what items?
- Provided in writing within 60 days of audit report date
- Addressed to and restricts use to client management and those charged with governance
- Defines and explains identified significant deficiencies and material weaknesses
- States audit was not designed to identify all significant deficiencies or material weaknesses
- Specifically expresses no opinion on internal cont
In an integrated audit of a nonissuer, an auditor finds a combination of control deficiencies that have a reasonable possibility of causing a material misstatement on the financial statements. The auditor should take which of the following actions?
