At the request of Smith Limiteds minority shareholders, you have recently completed the audit of the companys
Question:
At the request of Smith Limited’s minority shareholders, you have recently completed the audit of the company’s financial statements and issued an unmodified audit opinion.
The minority shareholders have become aware that you have relied extensively on the client’s internal controls when performing the audit. They are annoyed because the reason they requested an audit is that they no longer had trust in management, but in conducting your audit, you have yourself trusted management and relied on the company’s controls.
Required
Prepare a brief written statement to the minority shareholders explaining how you have been able to reduce audit risk to a sufficiently low level while relying on the company’s internal controls.
Auditing and Assurance services an integrated approach
ISBN: 978-0134065823
16th edition
Authors: Alvin A. Arens, Randal J. Elder, Mark S. Beasley, Chris E. Hogan