Assume that management of a company with a December 31 fiscal year end began its assessment of

Question:

Assume that management of a company with a December 31 fiscal year end began its assessment of ICFR early in the fiscal year. Based on its procedures, management concluded deficiencies existed in ICFR and made major changes to the accounting information system that were completed by June 30. The auditor tested ICFR after the changes were made and concluded that ICFR was effective as of the fiscal year end.

Required:
(a) How does this situation affect the auditor’s procedures for the financial statement audit?
(b) For the financial statement audit, can the auditor rely on internal controls for the second half of the fiscal year? The first half of the fiscal year? Why?
(c) How is the audit evidence for the for each half of the year affected? Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...