The auditor provides an opinion on the effectiveness

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The auditor provides an opinion on the  effectiveness  of internal control in  the contest of  agreed upon criteria , that is, the  COSO internal control integrated framework The auditor recognizes and conveys to users that there are  limitations  of  internal control that can  affect its effectiveness in the future    Adverse opinion on internal control over financial reporting  Auditor finds one or more material weaknesses Auditor describes weakness identified, but not discuss actins being taken  to overcome weaknesses Auditor does not discuss whether the weakness was first identified by  management or the auditor Steps in an integrated audit Both management and the auditors must report on internal control o Evidence is based on both the design and the operation of controls o Five components of the COSO framework must be evaluated Control environment—“tone at the top” Risk assessment Control activities  Information and communication  Monitoring  o Evaluation must include testing of important controls to determine  whether they are working effectively o Auditor testing must be independent of management testing  Focus on significant accounts o Brainstorming analysis regarding the potential for fraud o Review of market expectations of company performance o Trends in performance o Size of the account balance o Subjectivity of estimates Framework for evidence in an integrated audit—Implications for the integrated  audit
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The quality of internal control affects the reliability of financial statement  data The control environment is  pervasive  and affects the process of recording  transactions, making estimates and making adjusting entries The control environment is  strong  and the controls over transacting  processing, adjusting and estimating are good, then both management  and the auditor would have a  high degree of confidence  that the financial  accounts are fairly stated and financial disclosures are adequate  A potential for misstatement exists in inputting, processing, estimating and  adjusting account balances There is always a need to perform some substantive testing of material  account balances, but the nature, timing, and extent of that testing will  depend on the quality of internal controls The auditors evidence is based on testing internal controls, testing  transactions and substantive tests of account balances, including  substantive analytical procedures and direct tests of account balances Steps to implement an integrated audit 1. Update information about various risks 2.
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