If serious control deficiencies are detected prior to year-end and management implements changes to its systems to correct the deficiencies, the auditor:
A) must retest the ITGC again to ensure no additional deficiencies exist.
B) cannot rely on the ICFR in planning its financial statement audit.
C) must test the changes made to the system to determine if the deficiency was resolved.
D) All of the above.

Question

Quizplus · Accepted Answer

The auditor must test the changes made to the system to determine if the deficiency was resolved. This is because the implementation of changes to correct serious control deficiencies indicates that management is committed to maintaining effective control over financial reporting. However, the auditor must still test the changes made to ensure that the deficiency was indeed resolved. It is not necessary to retest the ITGC again, as the changes made should be sufficient to correct the deficiencies. The auditor can still rely on the ICFR in planning its financial statement audit, as long as the changes made are effective in remedying the deficiencies.

If Serious Control Deficiencies Are Detected Prior to Year-End and Management