Area IV: Forming Conclusions and Reporting — CPA Practice Question 44

How to approach this question

Remediation Rule: Fixing it isn't enough. You have to prove it works for a 'sufficient period'. Late fixes = Adverse Opinion.

Full Answer

B.Adverse opinion on ICFR because the remediated control has not operated for a sufficient period of time to support a conclusion of effectiveness.✓ Correct

Under PCAOB AS 2201, for a remediated control to be considered effective, it must operate for a sufficient period of time to permit the auditor to obtain sufficient evidence. If the remediation occurs too close to year-end (like 1 month for a significant control), the auditor cannot conclude it is effective, and the material weakness remains for reporting purposes.

Common mistakes

Thinking 'It's fixed, so it's fine'. The timing matters.

An auditor is performing an audit of an issuer. The auditor identifies a material weakness in internal control. The client remediates the weakness one month before year-end. The auditor tests the remediated control and finds it effective. What is the appropriate reporting conclusion?

How to approach this question

Full Answer

Common mistakes

Practice the full CPA AUD Practice Exam 2

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