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Sarbanes Oxley Act -
Auditing Standards |
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Public
Company Accounting Oversight
Board
Bylaws
and Rules – Standards – AS2
Auditing
Standard No. 2: An Audit of Internal Control
Over Financial Reporting Performed in
Conjunction With an Audit of Financial
Statements
Example
A-4
ILLUSTRATIVE REPORT
DISCLAIMING AN OPINION ON
MANAGEMENT'S
ASSESSMENT OF THE
EFFECTIVENESS OF INTERNAL CONTROL
OVER
FINANCIAL REPORTING
AND DISCLAIMING AN OPINION ON
THE
EFFECTIVENESS OF
INTERNAL CONTROL OVER FINANCIAL
REPORTING
BECAUSE OF A
LIMITATION ON THE SCOPE OF THE
AUDIT
Report
of Independent Registered Public Accounting
Firm
[Introductory
paragraph]
We
were engaged to audit management's assessment
included in the accompanying
[title
of management's report] that W Company
maintained effective internal control
over
financial
reporting as of December 31, 20X3 based on
[Identify control criteria,
for
example,
"criteria established in Internal
Control—Integrated Framework issued by
the
Committee of
Sponsoring Organizations of the Treadway
Commission (COSO)."].
W
Company's
management is responsible for maintaining
effective internal control over
financial
reporting and for its assessment of the
effectiveness of internal control
over
financial
reporting.
[Omit
scope paragraph]
[Explanatory paragraph that
describes scope
limitation]1/
1/
If, through the limited procedures performed,
the auditor concludes that a
material
weakness exists, the auditor should add the
definition of material weakness
(as
provided
in paragraph 10) to the explanatory paragraph.
In addition, the auditor should
include
a description of the material weakness and its
effect on the achievement of
the
objectives
of the control criteria.
[Definition
paragraph]
A
company's internal control over financial
reporting is a process designed to
provide
reasonable
assurance regarding the reliability of financial
reporting and the preparation
of
financial statements for external purposes in
accordance with generally
accepted
accounting
principles. A company's internal control over
financial reporting includes
those
policies and procedures that
(1)
pertain to the maintenance of records that, in
reasonable detail, accurately and fairly
reflect
the transactions and dispositions of the assets
of the company;
(2)
provide reasonable assurance that transactions
are recorded as necessary to permit
preparation
of financial statements in accordance with
generally accepted accounting
principles,
and that receipts and expenditures of the
company are being made only in
accordance
with authorizations of management and directors
of the company; and
(3)
provide reasonable assurance regarding
prevention or timely detection of unauthorized
acquisition, use, or disposition of the
company's assets that could have a material
effect on the financial
statements.
[Inherent limitations
paragraph]
Because
of its inherent limitations, internal control
over financial reporting may
not
prevent
or detect misstatements. Also, projections of
any evaluation of effectiveness
to
future
periods are subject to the risk that controls
may become inadequate because
of
changes
in conditions, or that the degree of compliance
with the policies or procedures
may
deteriorate.
[Opinion
paragraph]
Since
management [describe scope restrictions] and we
were unable to apply other
procedures
to satisfy ourselves as to the effectiveness of
the company's internal control
over
financial reporting, the scope of our work was
not sufficient to enable us to
express,
and we do not express, an opinion either on
management's assessment or on
the
effectiveness of the company's internal control
over financial reporting.
[Explanatory
paragraph]
We
have also audited, in accordance with the
standards of the Public Company
Accounting
Oversight Board (United States), the [identify
financial statements] of W
Company
and our report dated [date of report, which
should be the same as the date
of
the report on the
effectiveness of internal control over financial
reporting]
expressed
[include
nature of opinion].
[Signature]
[City
and State or Country]
[Date]
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