[FUBARFAR]

Which of the following best describes a registered firm’s responsibility with respect to the internal control of a client who is an issuer?
I. The firm must provide an internal control report describing management’s responsibility to establish internal control.
II. The firm must provide an internal control report describing the assessed level of control risk for each material account balance.
III. The firm must provide an internal control report assessing the effectiveness of internal control.
IV. The firm must provide an internal control report attesting to management’s assessment of the effectiveness of internal control.

Correct answer: I,III, and IV

I’m confused. I have not been able to nail down a clear confirmation that we provide an internal control report attesting to management’s assessment of the effectiveness of internal control. Can anyone explain this to me? I’ve looked at the audit opinion paragraphs of issuers and see nothing regarding management’s assessment, only on the auditors assessment of the effectiveness of internal control.

FAR - 7/19/2016 - 83
BEC - 8/30/2016
AUD - TBD
REG - TBD

[mperez102204]

This may not be 100%, but this is the thought I used to answering this question…. When you are communicating in any way with the client (oral or written) about the procedures that are going to be used or has been used, you do not want to list anything that would allow the client to know how you conducted your tests. So, if you are auditing a firm and have to reference internal control based on the procedures you used, you would not disclose any information regarding the judgement used. So II. the firm must provide an internal control report describing the assessed level of control risk at each material account, would not be included because it would given insight to the client the judgement that is used in the auditing process. I & IV. would be in the engagement letter form, III. would be in the opinion part of the report on internal control.

I hope this makes sense, again this might not be 100%,but this is how i answered the question when i first saw it.

[FUBARFAR]

Bump — My test is tomorrow and I'm freaking out!

FAR - 7/19/2016 - 83
BEC - 8/30/2016
AUD - TBD
REG - TBD

[bucknell39]

We have audited ABC Company's internal control over financial reporting as of December 31, 20X2, based on (Identify control criteria, e.g., “criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)”). ABC Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying (title of management's report). Our responsibility is to express an opinion on the company's internal control over financial reporting based on our audit.

This taken directly from a sample report on the effectiveness of internal control over financial reporting. This is the introductory paragraph. Your answer is in this paragraph. This is auditing standard No. 5 of PCAOB.

[Author]

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