Question

An auditor notices that a bank’s internal controls over loan approvals are weak, but substantive testing of balances shows no material misstatements. Which is the correct implication under SA 315 and SA 330?

A Audit opinion must be qualified immediately.
B Internal control weaknesses are reported, but clean opinion can still be given if substantive evidence supports true and fair view.
C No reporting of weaknesses is necessary since balances are correct.
D Weak controls automatically imply misstatements exist.
E Auditor must withdraw from the engagement.
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