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After testing a client's internal control activities, an auditor discovers a number of significant deficiencies in the operation of a client's internal controls. Under these circumstances the auditor most likely would a. Issue a disclaimer of opinion about the internal controls as part of the auditor's report. b. Increase the assessment of control risk and increase the extent of substantive tests. c. Issue a qualified opinion of this finding as part of the auditor's report. d. Withdraw from the audit because the internal controls are ineffective.
B.
As an auditor we test internal controls when we want to place reliance on them. After testing controls when we came to know that controls are not operating effectively then we amend our audit plant and increase the extent of substantive testing.
Its option (B) b. He will increase the assessment of control risk and increase the extent of substantive tests in order to gather evidence that is sufficient and appropriate in order to arrive at a conclusion.
Internal control is the integration of the activities, plans, attitudes, policies, and efforts of the employees of a department working together to provide reasonable assurance that the department will achieve its mission.
Risk assessment is the identification, analysis, and management of risks relevant to the achievement of the department’s goals and objectives. Risks include internal and external events or circumstances that may occur and adversely affect operations. Once risks are identified, management should consider their impact (or significance), the likelihood of their occurrence, and how to manage them.
(b) is the correct answer.
Increase the assessment of control risk and increase the extent of substantive tests.
It s normal B point, like other coleague who write this.
Answer is B
But this question relates to external auditing not to internal auditing.
The internal auditor do not issue an opinion on the FS.(option C).
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