Question

The auditor will issue an unqualified opinion on internal control over financial reporting when?

1) there are no identified material weaknesses as of the end of the fiscal year.
2) there have been no restrictions on the scope of the auditor's work.
3) both a and b
4) either a or b

Answer 1

An auditor will issue an unqualified opinion on internal control over financial reporting when the company has maintained effective internal controls without any significant deficiencies or material weaknesses.

Step-by-step explanation:

An auditor will issue an unqualified opinion on internal control over financial reporting when the auditor determines that the company has maintained effective internal controls and that those controls have been operating effectively over a period of time. This means that the company has implemented processes and procedures to ensure the accuracy and reliability of its financial reporting, and the auditor has found no significant deficiencies or material weaknesses in those controls.

To illustrate, let's say that a company has implemented a system where every financial transaction is recorded and reviewed by multiple individuals to ensure accuracy. The auditors have inspected this system and found that it has been consistently operating effectively for the past year, with no significant deficiencies or material weaknesses. In this case, the auditor would issue an unqualified opinion on the company's internal control over financial reporting.

In summary, an unqualified opinion on internal control over financial reporting is issued when the auditor determines that the company has maintained effective controls that have been operating effectively over a period of time, with no significant deficiencies or material weaknesses.