The auditor may issue a joint opinion or issue two separate opinions. The same auditor is required by the Sarbanes-Oxley Act of 2002 to conduct both the audit of internal control and the audit of the client’s financial statements. Thus, this approach is called an integrated audit.
What is an audit of internal control over financial reporting?
The auditor’s objective in an audit of internal control over financial reporting is to express an opinion on the effectiveness of the company’s internal control over financial reporting. This standard establishes the fieldwork and reporting standards applicable to an audit of internal control over financial reporting.
Can auditors rely on internal controls?
Deficiencies in audits of internal control also can affect the audit of the financial statements. In integrated audits, auditors often rely on controls to reduce their substantive testing of financial statement accounts and disclosures.
Are there any limitations to the internal controls over financial reporting?
Our responsibility is to express an opinion on management’s assessment and an opinion on the effectiveness of the company’s internal control over financial reporting based on our audit. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
What are the goals of conducting an audit of financial statements and internal controls?
The objective of an audit of internal controls is to ensure that future errors and potential fraud is prevented. An auditor’s opinion enhances the degree of confidence that intended users can place in the financial statements. Why do larger public companies require an audit on internal controls?
How does internal control affect financial reporting?
Effective internal control reduces the risk of asset loss, and helps ensure that plan information is complete and accurate, financial statements are reliable, and the plan’s operations are conducted in accordance with the provisions of applicable laws and regulations.
When to include internal control over financial reporting?
1/If the auditor issues separate reports on the audit of internal control over financial reporting and the audit of the financial statements, both reports should include a statement that the audit was conducted in accordance with standards of the Public Company Accounting Oversight Board (United States).
Is the Auditor required to identify all internal control deficiencies?
.82 The auditor is not required to perform procedures that are sufficient to identify all control deficiencies; rather, the auditor communicates deficiencies in internal control over financial reporting of which he or she is aware.
What should be considered when planning an integrated audit?
When planning an integrated audit, the auditor should evaluate whether the following matters are important to the company’s financial statements and internal control over financial reporting and, if so, how they will affect the auditor’s procedures –
What should an auditor know about a company?
Knowledge of the company’s internal control over financial reporting obtained during other engagements performed by the auditor; Matters affecting the industry in which the company operates, such as financial reporting practices, economic conditions, laws and regulations, and technological changes;
