chap 12 auditor reporting on internal control

Question 1

a qualified or disclaimer or opinion is issued when the auditor is unable to determine if there are material weaknesses due to what (2)

Answer 1

1. a restriction on the scope of the audit 2. circumstances where she is unable to obtain sufficiewnt appropriate evidence

Question 2

what is the most common cuase of an adverse opinion in the auditors report on internal control?

Answer 2

when management identified a material weakness in its report

Question 3

an auditor will issue an adverse opinion on the effectiveness of internal control when?

Answer 3

one or more material weaknesses exist

Question 4

the auditor will issue an unqualified opinion on internal control over fiancial reporting when what 2 conditions exist?

Answer 4

1. there are no identified material weaknesses as of the end of the fiscal year 2. there have been no restrictions on the scope of the auditors work

Question 5

the auditors opinion on the effectiveness of internal control is as of ?

Answer 5

the end of the fiscal year

Question 6

auditors generally prepare management letters as a value added service. what do these include (2)

Answer 6

1. less significant internal control related issues 2. opportunies for the client to make operational improvements

Question 7

if the auditors report is a adverse one because of the existence of a material weakness and the material weakness has not been included in managements assessment, what should the report include?

Answer 7

that a material weakness has been identified but not included in managements assessment

Question 8

what are the 4 probably responses to finding a material mistatement in the FSs that was not initially identified by the companys internal controls.

Answer 8

1. auditor consider whether the misstatement indicates the existence of a material weakness or a significant deficiency 2. auditor can still issue unqualified opinion on FSs if client adjusts them to correct the misstatement prior to issuance 3. management changes its report on internal control to assert the controls are not operating effectively 4. auditro issue an adverse opinion on internal control if the deficiency is considered a material weakness

Question 9

if a material weakness is identified prio to the end of the fiscal year, when can the auditor still issue an unqualified opinion (2)

Answer 9

1. if the material weakness has been remediated 2. if the revised control has been tested to ensure it is designed, implemented, and operating effectively

Question 10

communications about significant deficiencies and material weakneswses must be made to manaGEMNET NO LATER THAN WHAT?

Answer 10

60 days following the audit report release

Question 11

the communication about significant deficiencies and material weakneswses is usually address to who ?(2)

Answer 11

1. audit committee 2. management

Question 12

T/F the audit is designed to detect deficiencies in internal control that are less severe than a material weakness

Answer 12

F

Question 13

the scope of the auditors report on internal conrol is limited to what?

Answer 13

obtaining reasonable assurance that material weaknesses in internal control are identified

Question 14

the auditor must communicate what 2 things in writing to those charged with governance as soon as they become aware of their existence?

Answer 14

1. significant deficiencies 2. material weaknesses

Question 15

what requires the auditor to express a qualified opinion or a disclaimer of oninion on internal control?

Answer 15

a scope limitation

Question 16

the auditor must communicate significant deficiencies and material weaknesses to who? how do they have to do it?

Answer 16

those charged with goverance in writing