Q33. Internal ControlPick two of the five components of internal control and describe its requirements. What does the component relate to? What is management responsible for doing related to each component?Q32 Audit ReportsWhat kind of audit report would you give in each of the following situations? Why?A company’s inventory records were deficient and the auditor was required to satisfy herself that the inventory was properly stated using alternative procedures. She is satisfied that she has sufficient appropriate evidence.A company changes from FIFO to LIFO for inventory valuation and the auditor concurs with the change. The change has a material effect on the comparability of the entity’s financial statements this year, but is expected to have an immaterial effect in the future.Inadequate record retention policies by the client have resulted in a situation in which a CPA is unable to obtain sufficient appropriate audit evidence with respect to a material account.Q31 Group and Component AuditorsTaylor Corporation is a nonpublic domestic company with two wholly owned domestic subsidiaries. Noah, CPA, has been engaged to audit the financial statements of the parent company and one of the subsidiaries and to act as the group auditors. Emilia, CPA, has audited financial statements of the other subsidiary. Noah has not yet decided whether to make reference to the audit of Emilia.What audit procedures should Noah perform with respect to the component auditor, regardless of whether Noah decides to make reference to Emilia in the report?
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