Response to the following :
Assume that scenario is a material weakness. Prepare a draft of the auditor's report for an audit of ICFR. Assume that Lorenz's auditor is issuing a separate report on internal control.
Scenario :
During its assessment of ICFR, the management of Lorenz Corporation and its auditors identified the following control deficiencies that individually represent significant deficiencies:
· Inadequate segregation of duties over certain information system access controls.
· Several instances of transactions that were not properly recorded in subsidiary ledgers. While the transactions that weren't recorded properly were not material, the gross amount of the transactions of that type totaled up to an amount several times materiality.
· A lack of timely reconciliations of the account balances affected by the improperly recorded transactions.