Many of Canada's larger public companies are listed on American stock exchanges. Auditors who conduct these audits are required to follow PCAOB auditing standards. In that type of audit, in addition to issuing an opinion on the financial statements, the auditors also issue an opinion on internal controls over financial reporting.
REQUIRED
1. Access the PCAOB audit standard AS 5 ( www.pcaob.org ) and explain the objective of an audit of internal control over financial reporting.
2. Refer to CAS 200 and explain what defines whether financial statements are fairly stated.
3. Refer to PCAOB AS 5 and explain what defines whether internal control is considered effective.
4. Are the fairness of financial statements and effectiveness of internal controls related?