PCAOB on Reporting whether a Previously Reported Material Weakness Continues to Exsist Flashcards
Define a material weakness?
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
What are key indicators of material weakness?
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
If the auditors discover material weaknesses in controls, who should those be communicated too?
- Management AND audit committee
IN WRITING
Who should significant deficiencies be communicated to?
- Audit Committee
If the auditors believe that the audit committees oversight of internal controls is ineffective, who should that be communicated to?
- The full board of directors
If there are any material weaknesses, what is the opinion?
Adverse Opinion- Needs to include the words material weakness in the report
If there is a scope limitation, what should the auditor do?
Withdrawal or issue a disclaimer of opinion