Internal Control Communications and Reports SU 9

Question 1

Example of a significant deficiency or material weakness that would be communicated to those charged with governance

Answer 1

Evidence of a lack of objectivity by those responsible for accounting decisions

Question 2

Examples of information that SHOULD be communicated to those charged with governance

Answer 2

The process used by management in formulating sensitive accounting estimates

Uncorrected and CORRECTED misstatements

Auditor disagreements with management
Initial selection of significant accounting policies

Significant findings from the audit

Overview of the planned scope and timing of the audit

Question 3

Objective of the auditor’s report on internal control over financial reporting for a public entity

Answer 3

To express an opinion as to whether internal control is effective

Question 4

During audit of financial statements and audit of internal control over financial reporting, a material weakness was discovered in internal control. What opinion should the auditor express?

Answer 4

ADVERSE opinion on internal control

Question 5

What is required to be communicated in WRITING?

Answer 5

Significant deficiencies and MATERIAL weaknesses

Question 6

Examples of entity-level controls:

Answer 6

Control environment
Controls over management override
Monitoring of the results of operations
Controls over the period-end financial reporting process
Risk assessment process