48AU-C 940 An Audit of Internal Control over Financial Reporting That Is Integrated with an Audit of Financial Statements


Definitions of Terms

Objectives of AU-C 940


Required Conditions for Engagement Acceptance

Evidence Supporting Management’s Assessment

Integrating the Controls Examination with the Financial Statement Audit

Risk Assessment

Using the Work of Others

Planning the Engagement

Use a Top-Down Approach

Testing Controls

Evaluating Control Deficiencies

Forming an Opinion

Reporting Requirements

Adverse Opinions

Report Modifications

Other Topics

AU-C 940 Illustrations

Illustrations 1–5: Illustrative Auditor’s Reports (AU-C 940.A165)

Illustration 6: Illustrative Written Communication of Significant Deficiencies and Material Weaknesses (AU-C 940.A156)

Illustration 7: Illustrative Management Report (AU-C 940.A157)


AU-C 940 guidance applies only when:

  • An auditor is engaged to perform an audit of ICFR, and
  • That audit is integrated with the financial statements audit (integrated audit).
  • (AU-C 940.01)


Source: AU-C 940.05. For definitions of the terms related to this section, see Appendix A, “Definitions of Terms”: Audit of ICFR, Control objective, Criteria, Detective control, Internal control over financial reporting (ICFR), Management’s assessment about ICFR, Preventive control.


AU-C Section 940.04 states that the objectives of the auditor in an audit of ICFR are to:

  1. obtain reasonable assurance about ...

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