Chapter 10 - Auditing Internal Controls

Report on audit of ic example report of independent

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+ Report on Audit of IC - Example Report of Independent Registered Public Accounting Firm The Board of Directors and Shareholders of Wal-Mart Stores, Inc. We have audited Wal-Mart Stores, Inc.’s internal control over financial reporting as of January 31, 2008, based on criteria established in Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Wal-Mart Stores Inc.’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 “Management’s Report to Our Shareholders”. Our responsibility is to express an opinion on the company’s internal control over financial reporting based on our audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States)… …In our opinion, Wal-Mart Stores, Inc. maintained, in all material respects, effective internal control over financial reporting as of January 31, 2008, based on the COSO criteria . We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Wal-Mart Stores, Inc. as of January 31, 2008 and 2007, and the related consolidated statements of income, shareholders’ equity, and cash flows for each of the three years in the period ended January 31, 2008 and our report dated March 26, 2008 expressed an unqualified opinion thereon. Ernst & Young LLP Rogers, Arkansas March 26, 2008
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+ Additional Communication on IC Audit n The auditor must communicate in writing to management and the audit committee all significant deficiencies and material weaknesses identified during the audit (AS5). n This communication should be made prior to the issuance of the auditor’s report on internal control over financial reporting. n In addition, the auditor should communicate to management, in writing, all control deficiencies identified during the audit and inform the audit committee when such a communication has been made .
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+ Integrated Audit n PCAOB Auditing Standard No. 5 describes an integrated audit of the financial statements and internal control over financial reporting. Accordingly, it is an integrated standard that (1) addresses both the work that is required to audit internal control over financial reporting and the relationship of that audit to the audit of the financial statements and (2) refers to the attestation of management's assessment of the effectiveness of the internal control as the audit of internal control over financial reporting. n Why? n The Board decided that these audits should be integrated because the objectives of, and work involved in performing, an audit of internal control over financial reporting and an audit of the financial statements are closely related. Furthermore, Section 404(b) of the Sarbanes-Oxley Act provides that the auditor's attestation of management's assessment of internal control shall not be the subject of a separate engagement .
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+ Integrating the Audits of Internal Control and Financial Statements An integrated audit is composed of the audits of internal control and the financial statements. The
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