Final answer:
An integrated audit consists of the audit of internal control over financial reporting and the financial statements audit. It ensures accurate financial statements and effective internal controls. Option D) is the correct answer, while the other options are incorrect.
Step-by-step explanation:
An integrated audit refers to the comprehensive evaluation of an organization's internal controls over financial reporting and the financial statements themselves. This type of audit is mandated by the Sarbanes-Oxley Act of 2002 for all publicly traded companies. The primary objective is to ensure that the company's financial statements are accurate and that the controls in place to safeguard the company's assets and accounting records are effective.
The correct answer to the student's question is: D) is comprised of audits of internal control over financial reporting and of financial statements. An integrated audit does not necessarily lead to a substantive audit strategy as stated in option A, nor does it deny the auditor access to information about the entity's controls as per option B. While option C states that it may be performed by two separate audit firms, typically the same firm conducts both parts of the audit to maintain consistency and efficiency.
It is important to note that the effectiveness of the internal controls is a key aspect that influences the auditor's decision concerning the scope of the substantive testing that will be performed on the financial statements. If the controls are deemed effective, the auditor might decide to do less substantive testing, relying more on the controls in place.