An audit firm has been engaged to report on whether a material weakness that previously resulted in an adverse opinion on internal control has been remediated.Which of the following statements is correct?

Question

Quizplus · Accepted Answer

According to the PCAOB standards, only the auditor who issued the adverse opinion on internal control can perform the follow-up engagement to report on the remediation of the material weakness. Therefore, if there has been an auditor change, the successor auditor cannot issue such a report. Option A is incorrect as a scope limitation may result in a qualified opinion or a disclaimer of opinion, depending on its materiality. Option C is incorrect as the scope of the engagement is limited to reporting on the remediation of the previously identified material weakness, and any new deficiencies identified will not result in an adverse opinion on the current engagement. Option D is incorrect as the follow-up engagement can take place at any time during the year and does not have to coincide with the year-end audit of internal control.

An Audit Firm Has Been Engaged to Report on Whether