Integrated audit

This topic contains 6 replies, has 4 voices, and was last updated by  CPA Hunter 3 months ago.

Viewing 7 posts - 1 through 7 (of 7 total)
  • Author
    Posts
  • #2262435

    murano
    Participant

    Say I'm doing an integrated audit of an issuer. If I give a qualified opinion on FS, can I still give an unqualified opinion on ICFR?

    AUD - NINJA in Training
    BEC - NINJA in Training
    FAR - 95
    REG - 99
    Hi 🙂
    #2262768

    12tang
    Participant

    I don't think so. Sound internal controls should be expected to lead to sound financial statements. If the latter is not sound and you report as such, then something in the internal controls is off. That's how I think about it, someone feel free to correct me if I'm wrong.

    2015:

    FAR - 84

    BEC/AUD/REG - Let life get in the way...

    2018/2019:

    BEC - 80

    FAR -

    AUD -

    REG -

    #2263026

    murano
    Participant

    Hi 12tang, thanks for the answer.
    I think it's better to separately ask two questions:
    1. In an integrated audit, does a qualified/adverse opinion due to GAAP issue preclude an unmodified opinion on ICFR?
    or, in other words, does a material misstatement in FS mean a material weakness in ICFR? (I know that a material weakness in ICFR does not mean a material misstatement in FS)
    2. In an integrated audit, does a qualified opinion/disclaimer due to GAAS issue preclude an unmodified opinion on ICFR?

    AUD - NINJA in Training
    BEC - NINJA in Training
    FAR - 95
    REG - 99
    Hi 🙂
    #2263941

    CPA Hunter
    Participant

    If you are giving a qualified opinion on FS, this means that you have a material misstatement on the FS. If you have a material misstatement on FS, there is a big chance you have a bench of material weaknesses in the design of the ICFR. Short answer is you cannot have an unqualified opinion on ICFR if you have a qualified opinion on FS but the opposite could be true. You can have a qualified opinion on ICFR but sill have an unqualified opinion on FS. Hope this helps.

    AUD - NINJA in Training
    BEC - 75
    FAR - 78
    REG - 79
    Just give me a 75 and let me become a CPA
    #2264025

    murano
    Participant

    Thanks @CPA Hunter
    But what if the qualified opinion on FS is due to GAAS issues (i.e. scope limitation)?

    AUD - NINJA in Training
    BEC - NINJA in Training
    FAR - 95
    REG - 99
    Hi 🙂
    #2264565

    MaLoTu
    Participant

    In the real world a Scope limitation imposed by the client would usually lead to disclaimer of opinion (at the very least) or withdrawal from the engagement since you would have to question management integrity.

    If it does lead back to integrity it could be related to some entity level controls.

    Can you post the question you are having trouble on? The exam is not going to delve into all the gray area of this topic. I think you will get more applicable information if others can explain in context.

    Almost always from my phone... please excuse my typos!

    All 4 passed - 2016

    CA CPA

    #2264574

    CPA Hunter
    Participant

    I agree with MaLoTu.

    Limitation of scope may lead to either a qualified opinion or a disclaimer by the auditor in the report. When the limitation is material, but not fundamental, the auditor renders a qualified opinion. This means that all other matters in the audit are okay except for the limitation of scope in the audit process. The auditor, therefore, has some reservations about the truth and fairness of the financial statements as a reflection of the firm's economic status.

    For ICFR, limitation of scope means that we have a problem with the control environment. Management needs to demonstrate commitment to integrity and ethical values (one of COSO five principles). limitation of scope is the opposite of this. There is no way you could give an unqualified opinion on ICFR if limitation of scope exists.

    This is just my opinion and I might be wrong.

    AUD - NINJA in Training
    BEC - 75
    FAR - 78
    REG - 79
    Just give me a 75 and let me become a CPA
Viewing 7 posts - 1 through 7 (of 7 total)

You must be logged in to reply to this topic.


Would You Hate It If I Gave You $162.12 Of Free CPA Review Material That Will Help You…

1) Study Less

2) Avoid Common CPA Candidate Mistakes

3) Get Higher Scores

4) Spend More Time with Friends and Family

5) Finally Pass and Get On With Your Life?