Dillon is auditing Byrne Corp., a public company. Byrne recently implemented a new accounting system. As part of the ICFR audit, Dillon discovers that material controls surrounding access to the new software were only partially installed. Dillon should:
A) withdraw from the audit.
B) issue a disclaimer opinion on the ICFR.
C) issue an adverse opinion on the ICFR.
D) depending on the circumstances, the auditor may choose any of the above.

Question

Quizplus · Accepted Answer

If material controls surrounding access to the new software are only partially installed, it means that there is a risk that unauthorized individuals can access sensitive information or perform fraudulent activities. This could lead to a misstatement of financial statements, thus affecting the reliability of ICFR. Therefore, an adverse opinion on ICFR is warranted. The auditor should communicate the issue to the management and the audit committee and recommend corrective actions. Withdrawing from the audit or issuing a disclaimer opinion would not be necessary if the issue can be addressed properly. However, depending on the circumstances, the auditor may choose any of the above.

Dillon Is Auditing Byrne Corp