Area IV: Reporting — CPA Practice Question 17

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Treat the two opinions (IC and FS) separately. Material Weakness = Adverse IC opinion. No FS errors = Unqualified FS opinion.

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C.An adverse opinion on internal control and an unqualified opinion on the financial statements.✓ Correct

An adverse opinion on internal control and an unqualified opinion on the financial statements.

Under PCAOB AS 2201, the existence of a material weakness requires an Adverse opinion on internal control. However, the financial statement audit is based on the numbers presented. If the financial statements are fairly stated (perhaps due to substantive corrections or luck), the FS opinion remains Unqualified (Unmodified).

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Assuming an adverse IC opinion automatically contaminates the FS opinion.

In an integrated audit of an issuer, the auditor identifies a material weakness in internal control over financial reporting. The auditor determines that the financial statements are NOT materially misstated. Which of the following reports should the auditor issue?

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Practice the full CPA AUD Practice Exam 5

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