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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
APPENDIX
A
Illustrative Reports
on Internal Control Over Financial
Reporting
A1.
Paragraphs 167 through 199 of this standard
provide direction on the
auditor's
report
on management's assessment of internal control
over financial reporting. The
following
examples illustrate how to apply that direction
in several different
situations.
Example
A-1
ILLUSTRATIVE REPORT
EXPRESSING AN UNQUALIFIED OPINION
ON
MANAGEMENT'S
ASSESSMENT OF THE EFFECTIVENESS OF
INTERNAL
CONTROL OVER
FINANCIAL REPORTING AND AN UNQUALIFIED OPINION
ON
THE EFFECTIVENESS OF
INTERNAL CONTROL OVER FINANCIAL
REPORTING
(SEPARATE
REPORT)1/
1/ If the auditor
issues separate reports on the audit of internal
control over
financial reporting
and the audit of the financial statements, both
reports should include
a statement that the
audit was conducted in accordance with standards
of the Public
Company Accounting
Oversight Board (United
States).
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.
[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 provides 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, 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,
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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