If Serious Control Deficiencies Are Detected Prior to Year-End and Management

question 6

Multiple Choice

If serious control deficiencies are detected prior to year-end and management implements changes to its systems to correct the deficiencies, the auditor:

• A) must retest the ITGC again to ensure no additional deficiencies exist.
• B) cannot rely on the ICFR in planning its financial statement audit.
• C) must test the changes made to the system to determine if the deficiency was resolved.
• D) All of the above.

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Definitions:

Issuing Corporation

A legal entity that offers its securities for sale to the public, typically through a stock exchange.

Carrying Amount

The book value of an asset or liability, determined according to the relevant accounting standards.

Unamortized Discount

The portion of a bond's original issue discount (OID) that has not yet been amortized or expensed over the term of the bond.

Unamortized Premium

An unamortized premium refers to the remaining amount of a premium above the face value of a bond that has not yet been expensed over the bond's life.