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Planned Audit Response Practice Test
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Q1
In an audit of an issuer under PCAOB standards, the auditor identifies that management’s control for reviewing monthly account reconciliations is performed, but documentation of the review is inconsistent and often added weeks later. The reconciliations cover several significant accounts, including accrued expenses and prepaid assets, and there were multiple post-close adjustments in prior periods. The auditor is considering whether to rely on the control to reduce substantive testing. How should the auditor respond to the control deficiency identified?
In an audit of an issuer under PCAOB standards, the auditor identifies that management’s control for reviewing monthly account reconciliations is performed, but documentation of the review is inconsistent and often added weeks later. The reconciliations cover several significant accounts, including accrued expenses and prepaid assets, and there were multiple post-close adjustments in prior periods. The auditor is considering whether to rely on the control to reduce substantive testing. How should the auditor respond to the control deficiency identified?