an audit process that incorporates the knowledge obtained from internal control testing to determine the optimal amount of evidence necessary to attest to the financial statements and to the effectiveness of internal controls.
an integrated audit
what involves auditing a company's fin stms as well as I/cs?
1. report on I/Cs by management
2. external audit report (only for public companies)
public companies are required to have audited fin stmts that are accompanied by what?
Auditing Standard No. 2
what auditing standard requires auditors to perform evaluation on I/cs at the same time that they perform the audit of the fin stmts?
Auditing Standard No. 5
what auditing standard requires auditors to perform an integrated audit?
the auditor's report on I/Cs
what provides a roadmap for the planning of the integrated audit as well as the describes the auditor's responsibilities and the evidence that must be gathered?
can a material weakness in I/cs exist even if fin stmts have not been materially misstated?
1. the report on I/Cs in the same report as the opinion on fin stmts (if not included in same report, must issue two reports that refer to each other)
2. the auditor's opinion on the effectiveness of I/Cs in the context of agreed upon criteria (assertion, COSO)
3. auditor recognizes and conveys to users that there are limitations of i/c that can affect its effectiveness in the future.
what 3 elements must the auditor's unqualified report contain?
adverse report on internal controls
a report in which the auditor communicates to shareholders that the company has not maintained effective internal control over financial reporting
an adverse report
what is issued when the external auditor finds one or more material weaknesses in a client's I/Cs over fin reporting?