During the ICFR audit, the auditor identified two significant deficiencies and concluded that the combined potential financial statement effect did not rise to the level of a material weakness. What opinion will be issued for the ICFR audit?

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BlackTom AI · Accepted Answer

Question restatement: The scenario describes an ICFR (Internal Control over Financial Reporting) audit where two significant deficiencies were found, but the combined potential effect did not rise to a material weakness. The task is to determine the appropriate opinion for the ICFR audit.
Option 1: 'Qualified (“except for”) opinion' — A qualified opinion would be appropriate if there were material scope limitations or if the auditor could not obtain sufficient evidence, or if there was a material misstatement in financial statements or ICFR. In this case, the issue is deficiencies that do not amount to a material weakness, and there is no indication of scope limitation or misstatement; thus a qualified opinion is not warranted.
Option 2: 'Adverse opinion' — An adverse opinion is issued when ICFR is not effective due to material weaknesses across multiple areas or a combination of deficiencies that render the control structure ineffective. Since the scenario explicitly states the combined effect does not rise to the level of a material weakness, this option is incorrect.
Option 3: 'Unqualified opinion' — An unqualified (clean) opinion on ICFR is appropriate when the auditor concludes that ICFR is effective, or, in the presence of deficiencies that are not material weaknesses, the deficiencies are not pervasive enough to compromise overall effectiveness. The two significant deficiencies do not meet the threshold of a material weakness, so the audit opinion would remain unqualified.
Option 4: 'Disclaimer of opinion' — A disclaimer would be issued if the auditor could not obtain sufficient evidence to form an opinion, typically due to significant scope limitations or circumstances preventing the audit. There is no indication of such limitations here, so a disclaimer is inappropriate.
Summary of reasoning: The key distinction is between material weaknesses and less-severe deficiencies. Since the combined effect of the identified deficiencies is below the material weakness threshold, the appropriate ICFR opinion is unqualified. The other options imply either scope limitations, misstatements, or pervasive weaknesses, none of which align with the described scenario.

ACCT:4100:0001 Fall25 Final Exam- Requires Respondus LockDown Browser

During the ICFR audit, the auditor identified two significant deficiencies and concluded that the combined potential financial statement effect did not rise to the level of a material weakness. What opinion will be issued for the ICFR audit?

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