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Internal control issues and audit reports

An auditor finishes the audit of a company's financial statements and discovers a material misstatement that was due to recording revenue on a transaction to a regular customer twice. The client acknowledged the error and readily corrected the control deficiency before the financial statements were issued.
Which of the following statements is correct regarding the auditor's assessment of internal control over financial reporting and report on the financial statements?
a. The auditor must issue an adverse report regarding the quality of the entity's
internal controls over financial reporting.
b. The auditor can issue an unqualified report on internal controls because the
error was detected during the normal part of the audit.
c. The nature and amount of the misstatement and the weakness does not need
to be separately communicated to the audit committee if it is noted in the auditor's
report on internal control.
d. The auditor should issue a qualified opinion on the company's financial statements
because the misstatement occurred in the recording of revenue.
e. a and d

Solution Preview

The solution to an internal control weakness is to expand testing, not issue an adverse ...

Solution Summary

The solution explains the proper treatment for the issue raised which eliminates all but one answer.