Question

Management documentation of the ICFR assessment should include all of the following except:

A) documentation regarding every control in a process.

B) documentation regarding reasonable support for the basis for management's assessment and conclusion.

C) documentation regarding the design of controls management has placed in operation.

D) documentation on the controls management concludes are adequate to address the entity's financial reporting risks.

Answer 1

The response addresses a question on ICFR, explaining that management documentation should not necessarily include documentation for every control but rather should support management's assessment and outline adequate controls design.

Step-by-step explanation:

The student's question pertains to the internal control over financial reporting, specifically what is necessary in management documentation for assessment of the Internal Control over Financial Reporting (ICFR). Among the options given, the one that is not required is A) documentation regarding every control in a process. Instead, it's important that the documentation supports the basis for management's assessment and conclusion, outlines the design of controls, and details the controls sufficient to address financial reporting risks.

Options B, C, and D are essential components of ICFR documentation. Option B) involves support for management's assessment and conclusion, which is necessary to substantiate the effectiveness of internal controls. Option C) requires documentation on the design of controls to demonstrate they are appropriately constructed to mitigate risks. Lastly, option D) indicates that the documentation should cover controls deemed adequate to address financial reporting risks, ensuring that the company's financial reporting is reliable.