Question

In conducting an integrated audit, an auditor finds a material misstatement. The client makes an adjustment so that the financial statements are no longer misstated and the auditor issues an unqualified audit opinion on the financial statements. What do you think is the most likely audit opinion on internal controls, and why?

Answer 1

INTERNAL CONTROLS are placed by management over the organisation to ensure financial statements are prepared in accordance with the GAAP. However due to human delligence and other factors there can be errors inspite of internal controls in place, primarliy due to deficiency in the internal controls placed. In such cases, the most likely audit opinion on internal controls would be to state material weakness in the internal controls that precludes the entity’s internal control from providing reasonable assurance that material misstatements in the financial statements will be prevented or detected on a timely basis.