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CMA Intermediate · Corporate Accounting and Auditing · Report on Internal Financial Control over Financial Reporting

An auditor tests a key control in an interim period in October and finds it operating effectively. The year ends on 31 March. Which of the following is the most appropriate approach regarding the remaining period?

The auditor should roll forward the interim evidence by checking for significant changes in the control after October and testing the remaining period to 31 March, with the extent depending on risk and interim results. Interim testing alone cannot support a conclusion at year-end.

  1. ANo further work is needed since the control was effective in October
  2. BObtain evidence about significant changes in the control and test it for the remaining period, with extent depending on risk and interim resultsCorrect
  3. CRe-test the entire year from 1 April ignoring the interim work
  4. DConclude the control is ineffective because testing was done before year-end

Explanation

Evidence from interim testing must be rolled forward to year-end. The auditor considers significant changes after the interim date and performs additional procedures for the remaining period, scaled to risk. Ignoring the gap is inadequate, and discarding interim work or declaring the control ineffective is unjustified.

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