Discuss AICPA CPA-Auditing Exam Topic 3 Question 65

In an audit of an issuer:

i. Management must assess and report on internal control.

ii. The auditor must assess and report on internal control.

AI only.

BII only.

CEither I or II.

DBoth I and II.

Suggested Answer: D

Choice 'd' is correct. When obtaining an understanding of an entity's internal control in a financial statement audit, an auditor is not obligated to search for significant deficiencies in the operation of internal control.

Choice 'a' is incorrect. In order to determine the nature, timing and extent of tests to be performed, an auditor must determine whether the control activities have been implemented.

Choice 'b' is incorrect. An auditor is required to perform procedures to confirm his/her understanding of the internal control systems' design, and to determine whether relevant controls have been implemented.

Choice 'c' is incorrect. An auditor is required to document his or her understanding of the entity's internal control components, even if he or she intends to use a substantive approach.

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41 comments · newest first

Garry 11 months ago

Seems like a no-brainer, but I can see why some might doubt it.

Vallie 11 months ago

Yep, both I and II are required by auditing standards.

Oneida 12 months ago

Wait, are you sure the auditor has to assess it too?

Maryanne 12 months ago

I agree, both I and II are essential for a proper audit.

Geoffrey 12 months ago

Management definitely has to report on internal control.

Gilma 1 year ago

I vaguely recall that in some cases, both I and II are required, but I can't remember if that's always the case. I guess I need to think this through more.

Felix 1 year ago

I feel like management's assessment is more about their own controls, while the auditor's is more independent. Does that mean I should pick I only?

Lang 1 year ago

I think I practiced a question similar to this, and it emphasized that both parties have roles in assessing internal control. So, I might lean towards D.

Alex 1 year ago

I remember that both management and the auditor have responsibilities regarding internal control, but I'm not sure if they both need to report on it.

Ettie 1 year ago

Okay, let's see. I'm pretty sure the lead needs to be in a CRM system to be assigned an acquisition program, so I'm leaning towards option A or C.

Werner 1 year ago

I practiced a question similar to this, and I feel like P2 could be it, but I really can't remember clearly.

Alease 1 year ago

Okay, let me think this through step-by-step. Catalog Client Scripts are designed to run on the client-side, so option A seems like the correct answer. I'll mark that one.

Teresita 1 year ago

I'm pretty sure VEC is specifically for websites, so I'll go with option A

Evangelina 1 year ago

I'll go with option E: the janitor has to assess and report on internal control. Because who knows the inner workings of a company better than the person mopping the floors, am I right?

Adela 1 year ago

↳ replying to Evangelina

Yeah, the janitor might have some insights, but ultimately it's the auditor's job to ensure accuracy and reliability in the audit process.

Gerardo 1 year ago

↳ replying to Evangelina

I agree, the auditor's expertise is crucial in evaluating the company's internal control processes.

Ashanti 1 year ago

↳ replying to Evangelina

That's an interesting take, but I think the auditor is the one responsible for assessing and reporting on internal control.

Dana 1 year ago

D has got to be the answer. Auditors and management need to work together on internal control, it's not a solo act. Teamwork makes the dream work, am I right?

Bobbye 1 year ago

↳ replying to Dana

Agreed. It's important for both parties to collaborate and ensure the accuracy and effectiveness of internal control measures.

Noemi 1 year ago

↳ replying to Dana

Yes, you're right. Both management and auditors play a crucial role in assessing and reporting on internal control.

Matt 1 year ago

↳ replying to Dana

D has got to be the answer. Auditors and management need to work together on internal control, it's not a solo act. Teamwork makes the dream work, am I right?

Felix 1 year ago

This is a tricky one, but I'm going with C. Either management or the auditor can take on this task, it's not a requirement for both.

Kerrie 1 year ago

↳ replying to Felix

I agree with the first user, it's D. Both I and II are required in an audit of an issuer.

Jolene 1 year ago

↳ replying to Felix

I disagree, I believe it's C. Either management or the auditor can do it.

Mike 1 year ago

↳ replying to Felix

I think it's D. Both management and the auditor must assess and report on internal control.

Albina 1 year ago

B seems like the right choice to me. The auditor, not management, is responsible for assessing and reporting on internal control. That's the auditor's job, not the company's.

Garry 1 year ago

↳ replying to Albina

Exactly, that's why option B is the right choice in this case.

Francoise 1 year ago

↳ replying to Albina

So, the auditor must assess and report on internal control, not management.

Lonny 1 year ago

↳ replying to Albina

I agree, the auditor's role is to evaluate the internal control of the issuer.

Makeda 1 year ago

↳ replying to Albina

B seems correct. The auditor is the one responsible for assessing and reporting on internal control.

Rebeca 1 year ago

↳ replying to Albina

That's the auditor's job, not the company's.

Merlyn 1 year ago

↳ replying to Albina

The auditor, not management, is responsible for assessing and reporting on internal control.

Tamra 1 year ago

↳ replying to Albina

B seems like the right choice to me.

Telma 2 years ago

I think D is the correct answer. Both management and the auditor have a responsibility to assess and report on internal control. It's a dual obligation.

Reena 1 year ago

↳ replying to Telma

Yes, that's correct. Both parties play a role in assessing and reporting on internal control.

Mel 1 year ago

↳ replying to Telma

So, the answer would be Both I and II, D.

Aliza 1 year ago

↳ replying to Telma

I agree, it's a shared responsibility between management and the auditor.

Peggie 1 year ago

↳ replying to Telma

D is correct. Both management and the auditor have to assess and report on internal control.

Cyndy 2 years ago

I'm not sure, but I think the answer might be C) Either I or II, because either management or auditor can assess and report on internal control.

Josphine 2 years ago

I agree with Alba, because both management and auditor have roles in assessing and reporting on internal control.

Alba 2 years ago

I think the answer is D) Both I and II.

AICPA CPA-Auditing Exam - Topic 3 Question 65 Discussion