Wiley Practitioner's Guide to GAAS 2023, 2nd Edition

50AU-C 940 An Audit of Internal Control over Financial Reporting That Is Integrated with an Audit of Financial Statements

• Scope
• Definitions of Terms
• Objectives of AU-C 940
• Requirements
  • 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
  • Report Modifications
  • Other Topics
• AU-C 940 Illustrations—Illustrative Reports

SCOPE

AU-C 940 guidance applies only when:

• An auditor is engaged to perform an audit of internal control over financial reporting (ICFR), and
• That audit is integrated with the financial statements audit (integrated audit).

(AU-C 940.01)

DEFINITIONS OF TERMS

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.

OBJECTIVES OF AU-C 940

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

1. obtain reasonable assurance about whether material weaknesses exist as of the date specified in management's assessment about the effectiveness of ICFR (as of date) and
2. express an opinion on the effectiveness of ICFR in a written ...