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Exam 6: Performing an Integrated Audit

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Question 31

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Under AS 5,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.

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Question 32

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In an integrated audit the auditor's report on internal control does not require the statement that

A) the audit was conducted in accordance with AICPA auditing standards.
B) management is responsible for maintaining effective internal control.
C) used COSO's internal control framework.
D) a reasonable basis exists for their opinion.

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Question 33

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Which of the following is not one of the phases in planning an integrated audit?

Ultimately,the starting point of the integrated audit should be to understand all of the following except

The requirement to report on internal control placed on public companies resulted from one particular type of internal control breakdown: front line employees of some major public companies overrode their control systems and issued misleading financial statements.

Once a company establishes that it has effective internal control over processes,monitoring can be effective by assuring that any changes made to the processes are fully documented and tested and that controls have not deteriorated.

Which of the following factor(s) is considered by the auditor in evaluating the potential for residual risk remaining in an account balance or class of transactions?

An adverse report on internal controls is rendered when the auditor finds

If the auditor finds material weaknesses in the internal controls of the client a qualified report would be issued.

In the risk-based audit approach the control environment serves as the first line of defense in mitigating the risks that a company has to manage.

In evaluating the strength of internal control in determining the nature,timing and extent of substantive audit evidence to collect the auditor must form their own independent assessment.Audit evidence can be reduced based upon the effectiveness of management's monitoring controls.

The concept of reasonable assurance regarding controls recognizes that the benefits of internal controls should not exceed the cost.

The external auditor can never rely to any extent on some of the company's evaluation and/or testing of controls,even when performed by a competent and independent internal audit function.

Regardless of the level of assessed control risk,the auditor must conduct some substantive procedures for material account balances.These procedures may include which of the following.

A company with a strong control environment demonstrates which of the following:

If management's report on internal control indicates a material weakness,the auditor would express a qualified opinion on the internal controls.

In planning the audit,auditors assess control risk for

Risk-based audit approach In conducting an integrated audit,discuss the potential effect of management's monitoring controls on the auditor's determination of the amount of direct testing of account balances that may be needed.

Recent research by COSO reinforces the concept that the control environment is not a very important factor associated with fraud

A material weakness in internal control is a deficiency in the design or operation of the control that adversely affects the company's ability to initiate,record,process or report external financial data reliably in accordance with GAAP.