Question

In which of the following situations would the auditor modify the audit report on ICFR?

a. When the auditor relies on the work of other auditors but decides not to include a reference to the other auditors.
b. When the auditor is unable to perform all procedures needed to evaluate the internal controls.
c. When the auditor concludes that management's report on ICFR is not complete or is improperly presented.
d. When the auditor identifies multiple unrelated significant deficiencies in ICFR.

Answer 1

An auditor would modify the audit report on ICFR in situations where management's report on ICFR is incomplete or improperly presented, or when there are multiple unrelated significant deficiencies in ICFR. Relying on other auditors' work without reference or incomplete procedures generally doesn't lead to a report modification on ICFR.

Step-by-step explanation:

The auditor would modify the audit report on Internal Control over Financial Reporting (ICFR) in situations where certain conditions are met. Specifically, the auditor would modify the audit report if:

• Management's report on ICFR is not complete or is improperly presented, or
• Multiple unrelated significant deficiencies in ICFR are identified, which could constitute a material weakness.

However, relying on the work of other auditors without mentioning them in the audit report, or being unable to perform all needed procedures, typically does not result in a modification of the audit report on ICFR, although these issues affect the audit work. Instead, such situations may lead to a scope limitation or a disclaimer of opinion regarding the audit of the financial statements.