PCAOB on Reporting whether a Previously Reported Material Weakness Continues to Exsist Flashcards

1
Q

Define a material weakness?

A

Break-down in internal controls where a material weakness or combination of significant deficiencies would flow through to the financial statements without detection resulting in a material misstatement

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2
Q

What are key indicators of material weakness?

A

1) Fraud by senior management
2) Restatement of prior F/S
3) Detection of a material misstatement in the current F/S
4) Ineffective oversight by the audit committee

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3
Q

If the auditors discover material weaknesses in controls, who should those be communicated too?

A
  • Management AND audit committee

IN WRITING

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4
Q

Who should significant deficiencies be communicated to?

A
  • Audit Committee
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5
Q

If the auditors believe that the audit committees oversight of internal controls is ineffective, who should that be communicated to?

A
  • The full board of directors
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6
Q

If there are any material weaknesses, what is the opinion?

A

Adverse Opinion- Needs to include the words material weakness in the report

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7
Q

If there is a scope limitation, what should the auditor do?

A

Withdrawal or issue a disclaimer of opinion

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