Area IV: Forming Conclusions and Reporting — CPA Practice Question 11

How to approach this question

Key concept: ICFR opinions are 'point-in-time' (as of year-end). If it's fixed and tested *sufficiently* by that date, the opinion is clean.

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B.Issue an unqualified opinion, provided the auditor determines the new control has operated for a sufficient period of time to demonstrate effectiveness.✓ Correct

The auditor must determine if the corrected control has operated for a sufficient period of time to support a conclusion on its effectiveness as of year-end.

PCAOB AS 2201 states that if a material weakness is remediated and the auditor obtains sufficient evidence that the new control is operating effectively *as of the balance sheet date*, the auditor can issue an unqualified opinion. The key is the 'sufficient period' of testing.

Common mistakes

Thinking existence of a weakness *at any point* in the year requires an adverse opinion (that's only if it exists *at year-end*).

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Common mistakes

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