For each of the following scenarios, indicate whether the auditor would issue (1) an unqualified or adverse
Question:
For each of the following scenarios, indicate whether the auditor would issue (1) an unqualified or adverse opinion on management's assessment of ICOFR effectiveness and (2) an unqualified or adverse opinion on actual ICOFR effectiveness. Explain.
a. Management identifies a less than material but more than inconsequential problem with its general ledger system that happens about once a quarter. The auditor concurs with management's assessment.
b. Management failed to identify a less than material but more than inconsequential problem in recording commission expenses throughout the year. The auditor identifies the problem during its control testing.
c. Management identifies a problem with its crisis management controls that could materially impact its financials but assesses that probability that the crisis will occur as remote. The auditor concurs with management's assessment.
d. Management fails to identify a control problem associated with the process for properly capitalizing or expensing building improvements. The likelihood of failure is only about 15 percent, but the impact would be material. The auditor identifies the problem during its control testing.
e. Management identifies that its CEO could easily override controls associated with preventing improper accounting for reserves associated with a material restructuring transaction. The auditor concurs with management's assessment.
Step by Step Answer:
Auditing Assurance And Risk
ISBN: 9780324313185
3rd Edition
Authors: W. Robert Knechel, Steve Salterio, Brian Ballou