Assume That an Auditor Conducts an Integrated Audit in Year

question 51

Essay

Assume that an auditor conducts an integrated audit in year one and issues a
clean opinion on management's assessment of internal control, internal control effectiveness,
and fairness of the financial statements. There is no change in the accounting
information system. During the first quarter of year two, the auditor identifies a
control deficiency that has not yet caused a material misstatement in the financial
records or statements, but could cause a material misstatement. What does this mean
regarding the appropriateness of the auditor's reports on ICFR in the prior year?

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Definitions:

18 Months

A time period equal to one and a half years, often used to describe the age of infants or the duration of certain projects or warranty periods.

Truth in Lending Act

A federal law designed to protect consumers in their dealings with lenders and creditors by requiring clear disclosure of key loan terms and costs.

Finance Charges

Costs associated with borrowing money, including interest rates, late fees, and other charges applied to a loan or credit.

Adjustment Code

Used in billing and accounting to denote corrections or modifications made to a patient's account in healthcare settings.