Suppose you are a new auditor with a small audit firm on the audit of Juan Stuart’s Daily News, a large private corporation with a significant minority stockholder that operates media outlets across the United States. The majority stockholder manages the day-to-day activities of the business. Because your audit firm is a new, small firm, it has yet to formulate its own guidance concerning the audit of ICFR. You remember hearing a lot about Section 404 of the Sarbanes Oxley Act of 2002 concerning internal control audits.
a. Does Section 404 of the Sarbanes Oxley Act pertain to the audit of Juan Stuart’s Daily News? Why or why not?
b. Is there anything related to ICFR that you are concerned with as the financial statement auditor of Juan Stuart’s Daily News?
c. Who are the stakeholders related to Juan Stuart’s Daily News? How do good financial statements benefit them? What ICFR issues would be of concern to the different stakeholders?
d. Develop audit steps to test the ICFR issues of concern.