Question

With the issuance of the SEC Interpretative Guidance and the implementation of AS5:

A)Auditors no longer opine on the effectiveness of management's internal control reporting process.
B)The number of controls that need to be documented, evaluated, and tested is reduced.
C)Both a. and b.
D)Neither a nor b

Answer 1

The SEC Interpretative Guidance and AS5 implementation did not eliminate auditors' opinion on the effectiveness of management's internal control reporting process.

Step-by-step explanation:

The correct answer is option D) Neither a nor b. With the implementation of AS5, auditors still provide an opinion on the effectiveness of management's internal control reporting process. They assess the design and operating effectiveness of controls and express an opinion on whether the controls are suitably designed and operating effectively to provide reasonable assurance regarding the financial statement assertions.

Option A is incorrect because auditors do still opine on the effectiveness of management's internal control reporting process.

Option B is incorrect because the implementation of AS5 did not reduce the number of controls that need to be documented, evaluated, and tested. Auditors are still required to evaluate and test a sufficient number of controls to obtain reasonable assurance.