AAA & Associates recently finished auditing LinktheEarth Corporation's internal control over financial reporting. AAA found a number of material weaknesses in the entity's internal control. LinktheEarth's management remediated all of the weaknesses that AAA found. However, the auditors did not have sufficient time to retest the controls. What report should AAA issue with regards to internal control over financial reporting at year-end?
A)Unqualified report.
B)Adverse report.
C)Qualified report.
D)Disclaimer on opinion.

Question

Quizplus · Accepted Answer

An adverse report should be issued when material weaknesses are found in the entity's internal control over financial reporting, and the auditors did not have sufficient time to retest the controls after management claimed to have remediated them. This indicates that the auditors cannot conclude that the internal controls are effective as of the year-end.

AAA & Associates Recently Finished Auditing LinktheEarth Corporation's Internal Control