Question

Which of the following concerning the auditor's report on internal control over financial reporting is correct?

A) The auditor's report contains an opinion on the effectiveness of internal control over financial reporting based on the auditor's independent work.

B) In the report on internal control over financial reporting, the auditor can issue only a qualified or an unqualified opinion.

C) The auditor needs to state management's assessment of internal control over financial reporting, but does not necessarily need to comment on whether he or she agrees.

D) An unqualified opinion is required if a material weakness is identified.

Answer 1

The correct statement is that the auditor's report contains an opinion on the effectiveness of internal control over financial reporting based on the auditor’s independent work. Auditors may issue various types of opinions, and cannot provide an unqualified opinion if a material weakness is identified.

Step-by-step explanation:

The correct statement concerning the auditor’s report on internal control over financial reporting is: A) The auditor’s report contains an opinion on the effectiveness of internal control over financial reporting based on the auditor’s independent work. This opinion informs stakeholders about the reliability of a company’s internal controls. The auditor must conduct an independent assessment and provide their opinion based on their findings.

Option B is incorrect because an auditor can issue an unqualified, qualified, adverse, or a disclaimer of opinion concerning the effectiveness of internal control over financial reporting. Option C is incorrect as the auditor does need to comment on whether they agree or disagree with the management’s assessment. Option D is incorrect because if a material weakness is identified, an auditor cannot issue an unqualified opinion; instead, they would issue an adverse opinion.