The Auditor's Standard Report on Internal Control Over Financial Reporting

question 54

Essay

The auditor's standard report on internal control over financial reporting has six main paragraphs. Listed below are excerpts from each of the six main paragraphs. Identify which paragraph each statement is from.
1.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
2.We have also audited, in accordance with the standards of the Public Companies Accounting Oversight Board(United States), the balance sheet of XYZ Co. as of December 31, 2005 and related statements of income, cash flows, and equity for the years then ended…
3.…management's assessment that XYZ Co. maintained effective internal control over financial reporting as of December 31, 2005, is fairly stated, in all material respects…
4.We have audited managements assessments….
5.A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting…
6.We conduct our audit in accordance with auditing and related professional practice standards established by the standards of the Public Companies Accounting Oversight Board (United States).

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Definitions:

P(A ∪ B)

The probability that at least one of two events A or B occurs.

Independent Events

Two or more events whose outcomes do not affect each other.

P(A ∪ B)

Represents the probability of the occurrence of at least one of two events A or B.

Mutually Exclusive

Two events that cannot occur at the same time, meaning the occurrence of one event precludes the other.