Communication in an Integrated Audit M2

Question 1

What would the Inherent Limitations Section of the Internal Controls State in a Internal Control report for a non-issuer state?

Answer 1

• Because of inherent limitations of any internal control, errors or fraud may occur and not be detected.
• Projections of the evaluation of internal control to future periods are subject to the risk that the internal control may become inadequate.

(only the report on internal control matters noted during an audit would, include a restricted use paragraph.)

Question 2

What would a report on a issuers integrated audit state?

Answer 2

• The audit includes obtaining an understanding of internal control over financial reporting.
• Management is responsible for maintaining effective internal control.
• The auditor believes the audit provides a reasonable basis for the issued opinion.
• The audit was conducted in accordance of the standards of the Public Company Accounting Oversight Board (PCAOB).

Question 3

What is the auditor’s responsibility on accepting an engagement to issue an opinion on if a previous material weakness has been resolved?

Answer 3

• The auditor’s objective is to express an opinion on whether the previously reported weakness has been eliminated.
• The auditor must obtain evidence about the design and operating effectiveness of the identified control.

Question 4

What goes on the report when an Auditor have identified material weaknesses?

Answer 4

• Adverse opinion.
• A statement that management failed to report two material weaknesses identified by the auditor with a description of the omitted weaknesses.
• The definition of material weakness should be included in the
  auditor’s report.
• A statement that material weaknesses have been identified.

Question 5

What must the Auditor communicate to those charged with governance?

Answer 5

• Communicate all control deficiencies to management
• Control deficiencies that are determined to be significant deficiencies and material weaknesses (IN WRITING TO MANAGEMENT AND AUDIT COMMITTEE) prior to the issuance of the auditor’s report on internal control over financial reporting.
• An overview of the planned scope and timing of the audit.
• Any significant findings from the audit.
• The auditor’s responsibilities to complete the audit in accordance with generally accepted auditing standards.
• Communication must be made before the report release date.

Question 6

What is involved when there are multiple auditors reporting on a integrated audit?

Answer 6

• As is the case with a financial statement audit, another auditor may be involved in the audit of an entity’s integrated audit.
• The principal auditor decides whether the involvement of the other auditor warrants reference in the auditor’s report.

Question 7

How does Auditor handle subsequent events during an integrated audit?

Answer 7

• The auditor is responsible for examining documentation related
  to the subsequent event.
• The auditor is responsible for inquiring of management.
• The auditor is responsible for obtaining written representation
  from management.
• Not required if subsequent events appear after the date of the auditor report. Must do if appears before the audit report date.