a deficiency in internal controls exists:
when the design or operation of a control does not allow management or employees, in the normal course of their assigned functions, to prevent, or detect and correct, misstatements on a timely basis
A significant deficiency is:
a deficiency, or combination of deficiencies, in internal control that is less severe than a material weakness but that merits attention by those charged with governance
A material weakness is:
a deficiency, or combination of deficiencies, in internal control that results in a reasonable possibility that a material misstatement of the financial statement will not be prevented or timely detected and corrected
A reasonble possibility means that the likelihood of the event is:
more than remote
Matters to be communicated include:
a. the auditors responsibilities in accordance with GAAS
b. an overview of the audit
c. significant and relevant findings
user entity
uses a service organization, The user entity's financial statements are being audited
user auditor
audits and reports on the financial statements of the user entity
service organization
provides services to users that are relevant to their internal control over financial reporting
service auditor
reports on controls at a service organization using a type 1 or type 2 report
type 1 report
report on managements description of a service organizations system and the suitability of the design of controls
Type 2 report
report on managements description of a service organizations system, the suitability of the design of the controls, and operating effectiveness of controls
a deficiency in internal controls exists:
when the design or operation of a control does not allow management or employees, in the normal course of their assigned functions, to prevent, or detect and correct, misstatements on a timely basis
A significant deficiency is:
a deficiency, or combination of deficiencies, in internal control that is less severe than a material weakness but that merits attention by those charged with governance
A material weakness is:
a deficiency, or combination of deficiencies, in internal control that results in a reasonable possibility that a material misstatement of the financial statement will not be prevented or timely detected and corrected
A reasonble possibility means that the likelihood of the event is:
more than remote
Matters to be communicated include:
a. the auditors responsibilities in accordance with GAAS
b. an overview of the audit
c. significant and relevant findings
user entity
uses a service organization, The user entity's financial statements are being audited
user auditor
audits and reports on the financial statements of the user entity
service organization
provides services to users that are relevant to their internal control over financial reporting
service auditor
reports on controls at a service organization using a type 1 or type 2 report
type 1 report
report on managements description of a service organizations system and the suitability of the design of controls
Type 2 report
report on managements description of a service organizations system, the suitability of the design of the controls, and operating effectiveness of controls