[sarita]

Can anyone help with how/if to report on internal control for the various types of reports. I thought I had a handle on it but the MCQ are throwing me off.

FAR 7/3/13 - 82
BEC 8/21/13 - 82
AUD 10/2/13 - 92
REG 12/3/13 - 88

DONE!!!! CA Candidate
Beat the 12/31/13 clock!

[10keyLeah]

That's a pretty broad question… PCAOB has to have an audit of internal control. Non-public – not required. If a non-public wants to have an IC audit, then it is covered by attestation standards. It's very similar to PCAOB, but there are some differenced.

The communication for a by-product report under AU – you have to report significant deficiencies and material weaknesses in a written report to management/governance. This report is restricted.

I hope this helps.

Ninja Combo, Yaeger, Wiley -- Licensed CPA, May 2015

[10keyLeah]

That's a pretty broad question… PCAOB has to have an audit of internal control. Non-public – not required. If a non-public wants to have an IC audit, then it is covered by attestation standards. It's very similar to PCAOB, but there are some differenced.

The communication for a by-product report under AU – you have to report significant deficiencies and material weaknesses in a written report to management/governance. This report is restricted.

I hope this helps.

Ninja Combo, Yaeger, Wiley -- Licensed CPA, May 2015

[JTS254]

I was actually just reviewing this myself. I think it helps to look at it from a high level. There are basically three things to know for the internal control reporting.

1.) Audit of Financials for Nonissuers – No responsibility for finding internal control weaknesses, but if you do find material weaknesses or significant deficiencies, you must report them.

2.) Examination of Internal Control- Basically an audit of internal controls for NONISSUERS- Attestation engagement.

3.) Audit of Financials for Issuers- As poster above said, PCAOB requires integrated audit of internal controls over financial reporting.

Numbers 2 and 3 are very similar in process, with a few differences in reporting.

FAR - 84
BEC - 89
AUD - 93
REG - 87

[JTS254]

I was actually just reviewing this myself. I think it helps to look at it from a high level. There are basically three things to know for the internal control reporting.

1.) Audit of Financials for Nonissuers – No responsibility for finding internal control weaknesses, but if you do find material weaknesses or significant deficiencies, you must report them.

2.) Examination of Internal Control- Basically an audit of internal controls for NONISSUERS- Attestation engagement.

3.) Audit of Financials for Issuers- As poster above said, PCAOB requires integrated audit of internal controls over financial reporting.

Numbers 2 and 3 are very similar in process, with a few differences in reporting.

FAR - 84
BEC - 89
AUD - 93
REG - 87

[sarita]

Thanks, guys. I think I got that, but still a little confused on things…

Why does the standard report state that “the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements…, but not for expressing an opinion on on the effectiveness of the entity's internal control.” I thought public audits would express an opinion on internal control. My understanding was that all audits consider IC, and only public audits or attestations on internal control actual report on IC. Is reporting on audits different than expressing an opinion? I could have sworn some MCQ talked about actually expressing an opinion on IC…

Also, for reviews, we consider IC for public companies… but not for private, correct?

And reporting on IC is required for governmental audits.

FAR 7/3/13 - 82
BEC 8/21/13 - 82
AUD 10/2/13 - 92
REG 12/3/13 - 88

DONE!!!! CA Candidate
Beat the 12/31/13 clock!

[sarita]

Thanks, guys. I think I got that, but still a little confused on things…

Why does the standard report state that “the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements…, but not for expressing an opinion on on the effectiveness of the entity's internal control.” I thought public audits would express an opinion on internal control. My understanding was that all audits consider IC, and only public audits or attestations on internal control actual report on IC. Is reporting on audits different than expressing an opinion? I could have sworn some MCQ talked about actually expressing an opinion on IC…

Also, for reviews, we consider IC for public companies… but not for private, correct?

And reporting on IC is required for governmental audits.

FAR 7/3/13 - 82
BEC 8/21/13 - 82
AUD 10/2/13 - 92
REG 12/3/13 - 88

DONE!!!! CA Candidate
Beat the 12/31/13 clock!

[barelystayingsane]

@sarita For your first question, you would change the wording in that paragraph when issuing a report for an issuer. If you're using Becker, I believe there is an example of a combined report on page A5-44. As you may know, you always consider IC regardless of if you're auditing an issuer or non issuer. “Considering IC” basically entails evaluating the design and implementation of IC.

“Also, for reviews, we consider IC for public companies… but not for private, correct?” Not quite…for reviews of interim financial information (covered under SAS for non issuers and PCAOB for issuers), you obtain an understanding of IC. For reviews of nonissuers under SSARS, you do not have to. The question on the exam should clarify if it is specifically a review of interim financials or not.

Reporting on IC is required for governmental audits, but remember that you're only reporting on the scope of your testing of IC and any findings, as well as your assessment of control risk.

[barelystayingsane]

@sarita For your first question, you would change the wording in that paragraph when issuing a report for an issuer. If you're using Becker, I believe there is an example of a combined report on page A5-44. As you may know, you always consider IC regardless of if you're auditing an issuer or non issuer. “Considering IC” basically entails evaluating the design and implementation of IC.

“Also, for reviews, we consider IC for public companies… but not for private, correct?” Not quite…for reviews of interim financial information (covered under SAS for non issuers and PCAOB for issuers), you obtain an understanding of IC. For reviews of nonissuers under SSARS, you do not have to. The question on the exam should clarify if it is specifically a review of interim financials or not.

Reporting on IC is required for governmental audits, but remember that you're only reporting on the scope of your testing of IC and any findings, as well as your assessment of control risk.

[sarita]

Thank you! You cleared it up for me, and I don't even know what I was thinking before. I guess I was confused because Becker strongly emphasizes knowing that standard report — but it really isn't the standard for public companies. I'm really not a fan of Becker's presentation!

FAR 7/3/13 - 82
BEC 8/21/13 - 82
AUD 10/2/13 - 92
REG 12/3/13 - 88

DONE!!!! CA Candidate
Beat the 12/31/13 clock!

[sarita]

Thank you! You cleared it up for me, and I don't even know what I was thinking before. I guess I was confused because Becker strongly emphasizes knowing that standard report — but it really isn't the standard for public companies. I'm really not a fan of Becker's presentation!

FAR 7/3/13 - 82
BEC 8/21/13 - 82
AUD 10/2/13 - 92
REG 12/3/13 - 88

DONE!!!! CA Candidate
Beat the 12/31/13 clock!

[sarita]

@barely, oh good luck today!!! or hope you did well if you already took it!!

FAR 7/3/13 - 82
BEC 8/21/13 - 82
AUD 10/2/13 - 92
REG 12/3/13 - 88

DONE!!!! CA Candidate
Beat the 12/31/13 clock!

[sarita]

@barely, oh good luck today!!! or hope you did well if you already took it!!

FAR 7/3/13 - 82
BEC 8/21/13 - 82
AUD 10/2/13 - 92
REG 12/3/13 - 88

DONE!!!! CA Candidate
Beat the 12/31/13 clock!

[barelystayingsane]

I took it already! I feel pretty confident, which I'm worried about, since confidence and performance seem to be inversely related on these exams 🙁

[barelystayingsane]

I took it already! I feel pretty confident, which I'm worried about, since confidence and performance seem to be inversely related on these exams 🙁

[sarita]

Looking at your scores, I HIGHLY doubt you didn't pass. Yeah normally they say that if you feel confident after you take an exam, it's not a good sign… but I don't think that's your case, at all. I think that it just means you definitely knew the material! If I were you, I would be more worried about making sure I got the Elijah Watt award 😉

FAR 7/3/13 - 82
BEC 8/21/13 - 82
AUD 10/2/13 - 92
REG 12/3/13 - 88

DONE!!!! CA Candidate
Beat the 12/31/13 clock!

[Author]

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