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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-5
ILLUSTRATIVE REPORT
EXPRESSING AN UNQUALIFIED OPINION
ON
MANAGEMENT'S
ASSESSMENT OF THE EFFECTIVENESS OF
INTERNAL
CONTROL OVER
FINANCIAL REPORTING THAT REFERS TO THE REPORT
OF
OTHER AUDITORS AS A
BASIS, IN PART, FOR THE AUDITOR'S OPINION AND
AN
UNQUALIFIED OPINION
ON THE EFFECTIVENESS OF INTERNAL
CONTROL
OVER FINANCIAL
REPORTING
Report
of Independent Registered Public Accounting
Firm
[Introductory
paragraph]
We
have audited 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.
Our
responsibility is to express an opinion on
management's
assessment
and an opinion on the effectiveness of the
company's internal control over
financial
reporting based on our audit. We did not examine
the effectiveness of internal
control
over financial reporting of B Company, a wholly
owned subsidiary, whose
financial
statements reflect total assets and revenues
constituting 20 and 30 percent,
respectively,
of the related consolidated financial statement
amounts as of and for the
year
ended December 31, 20X3. The effectiveness of B
Company's internal control
over
financial reporting was audited by other
auditors whose report has been
furnished
to
us, and our opinion, insofar as it relates to
the effectiveness of B Company's
internal
control
over financial reporting, is based solely on the
report of the other auditors.
[Scope
paragraph]
We
conducted our audit in accordance with the
standards of the Public Company
Accounting
Oversight Board (United States). Those standards
require that we plan and
perform
the audit to obtain reasonable assurance about
whether effective internal
control
over financial reporting was maintained in all
material respects. Our audit
included
obtaining an understanding of internal control
over financial reporting,
evaluating
management's assessment, testing and evaluating
the design and operating
effectiveness
of internal control, and performing such other
procedures as we
considered
necessary in the circumstances. We believe that
our audit and the report of
the
other auditors provide a reasonable basis for
our opinion.
[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]
In
our opinion, based on our audit and the report
of the other auditors,
management's
assessment
that W Company maintained effective internal
control over financial
reporting
as of December 31, 20X3, is fairly stated, in
all material respects, 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)."].
Also, in our opinion,
based on our audit and the report of
the
other
auditors, W Company maintained, in all material
respects, 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)."].
[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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