Question

Describe the auditor’s responsibility for disclosing the deficiencies to management and those charged with governance (audit...

Describe the auditor’s responsibility for disclosing the deficiencies to management and those charged with governance (audit committee) in each of these engagements.

a. A normal financial statement audit of a nonissuer

b. An integrated audit of a nonissuer

c. An integrated audit of a issuer

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Answer #1

a. In case of a normal financial statement of a non issuer, the auditor has a responsibility to express an opinion on the financial statements and is not required to evaluate the internal controls regarding their existence or performance. However, while auditing the financial statements if the auditor comes across any internal control deficiencies then he must report the same to the management and also in his audit report.

b. In case of integrated audit of non issuer, the auditor will test the effectiveness of the internal control along with the financial statements and report on the same.

c. An integrated audit of an issuer includes performance of an audit of the internal controls along with the audit of financial statements and report on deficiencies on both the internal controls and financial statements.

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