Below is an audit report for an integrated audit combined to include the opinions on both ICFR and the financial statements. Phrases reflecting 20 items that are required to be in this report have been removed and are provided in the list after the report. Select the proper phrase for each missing item and place the letter of the phrase on the answer space provided. All phrases will be used, and none will be used twice.
Report of _1_ Registered Public Accounting Firm
We have audited the accompanying balance sheets of W Company as of December 31, 20X8 and 20X7, and the related statements of income, stockholders’ equity and comprehensive income, and cash flows for each of the years in the three-year period ended December 31, 20X8. We also have audited W Company’s internal control over financial reporting as of December 31, 20X8, based on [Identify control criteria, for example, “criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).”]. W Company’s management is responsible for these__2__, for maintaining __3__, and for__4_, included in the accompanying ___5__. Our responsibility is to __6__ and __7__.

__8__. Those __9__the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained __10__. Our audits of the financial statements __11__ evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and __12__. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing __13__. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding __14__ and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

__15__internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods __16__ may become inadequate __17__, or the degree of compliance with the policies or procedures may deteriorate.

__18__, the financial statements referred to above present fairly, in all material respects, the financial position of W Company as of December 31, 20X8 and 20X7, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 20X8 __19__. Also in our opinion, W Company maintained, in all material respects, effective internal control __20__as of December 31, 20X8, based on [Identify control criteria, for example, “criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).”].

[SIGNATURE]

[City and State or Country]

[Date]

Phrases to choose from:

a. express an opinion on these financial statements

b. because of its inherent limitations

c. standards require that we plan and perform

d. independent

e. included examining, on a test basis

f. because of changes in conditions

g. its assessment of the effectiveness of internal control over financial reporting

h. the reliability of financial reporting

i. over financial reporting

j. financial statements

k. we conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States)

l. in conformity with accounting principles generally accepted in the United States of America

m. effective internal control over financial reporting

n. in our opinion

o. and evaluating the design and operating effectiveness of internal control based on the assessed risk

p. [title of management’s report]

q. evaluating the overall financial statement presentation

r. an opinion on the company’s internal control over financial reporting based on our audits

s. in all material respects

t. are subject to the risk that controls

Place the letter of the correct phrase on the answer line.

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