Internal Control Homework - Alex Fullerton Audit Problems...

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Alex Fullerton Audit- Problems 7-38 (D-G), 7-39 10/26/2016 7-38. D. Adverse because the ineffective monitoring component provides a reasonable possibility that a material misstatement in the financial statements would not be detected timely. E. Adverse because fraud, material or not, by senior management is always reported as a material weakness. F. Adverse because the control environment is suppose to “set the tone at the top” for all internal controls. I believe with this being ineffective it shows that their Board of Directors is also ineffective, which is a material weakness. G. Adverse because we can classify the management and audit committee to be ineffective since they are not showing concern over internal controls by not taking the proper steps to correct the deficiencies, which is a material weakness. 7-39. A. Adverse because there is a reasonable possibility that the control deficiencies you found could lead to a financial statement misstatement. Even thought the odds are low there is still a reasonable possibility so it is a material weakness.
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