During the audit of Seahorse LLC, the external auditors, Packhorse CPAs, have just completed their audit of the clients system of internal control and have documented their findings accordingly. One of Packhorse CPAs audit managers is discussing the results of the internal control audit with an audit intern, Halle. Halle is curious as to what the auditing firm will do with this information and these findings, and whether it affects any future parts of the audit. Which of the following responses is correct with respect to helping Halle understand this? • The audit of internal control is performed by the audit firm to comply with generally accepted auditing standards. With this part of the audit complete, the auditor can render an opinion on the client's financial statements. • Once the audit of the client's system of internal control is complete, the auditor examines the findings and apprises the client's management of any weaknesses in a timely manner. If weaknesses in internal control have been identified by the auditor, then it is more likely that the firm will adopt a reliance strategy. . Upon completion of the audit of internal controls, the auditing firm assesses the evidence gathered and typically notifies management of any deficiencies and weaknesses found. If the auditors' conclusion is that internal control is strong, then the auditor may perform less substantive testing. • None of these answer choices are correct.
During the audit of Seahorse LLC, the external auditors, Packhorse CPAs, have just completed their audit of the clients system of internal control and have documented their findings accordingly. One of Packhorse CPAs audit managers is discussing the results of the internal control audit with an audit intern, Halle. Halle is curious as to what the auditing firm will do with this information and these findings, and whether it affects any future parts of the audit. Which of the following responses is correct with respect to helping Halle understand this? • The audit of internal control is performed by the audit firm to comply with generally accepted auditing standards. With this part of the audit complete, the auditor can render an opinion on the client's financial statements. • Once the audit of the client's system of internal control is complete, the auditor examines the findings and apprises the client's management of any weaknesses in a timely manner. If weaknesses in internal control have been identified by the auditor, then it is more likely that the firm will adopt a reliance strategy. . Upon completion of the audit of internal controls, the auditing firm assesses the evidence gathered and typically notifies management of any deficiencies and weaknesses found. If the auditors' conclusion is that internal control is strong, then the auditor may perform less substantive testing. • None of these answer choices are correct.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:During the audit of Seahorse LLC, the external auditors, Packhorse CPAS, have just completed their audit of the clients
system of internal control and have documented their findings accordingly. One of Packhorse CPAs audit managers is
discussing the results of the internal control audit with an audit intern, Halle. Halle is curious as to what the auditing firm
will do with this information and these findings, and whether it affects any future parts of the audit. Which of the
following responses is correct with respect to helping
Halle understand this?
• The audit of internal control is performed by the audit firm to comply with generally accepted auditing standards. With
this part of the audit complete, the auditor can render an opinion on the client's financial statements.
• Once the audit of the client's system of internal control is complete, the auditor examines the findings and apprises the
client's management of any weaknesses in a timely manner. If weaknesses in internal control have been identified by
the auditor, then it is more likely that the firm will adopt a reliance strategy.
• Upon completion of the audit of internal controls, the auditing firm assesses the evidence gathered and typically
notifies management of any deficiencies and weaknesses found. If the auditors' conclusion is that internal control is
strong, then the auditor may perform less substantive testing.
• None of these answer choices are correct.
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