With which standard, the auditor's substantive procedures must include reconciling the financial statements to the accounting records and should include examining material adjustments made during the course of preparing the financial statements.
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A. B. C. D.B
The correct answer to this question is A. Integrated Audit Financial Statement.
An integrated audit is an audit that includes both an audit of the financial statements and an audit of internal control over financial reporting (ICFR). The auditor's substantive procedures must include reconciling the financial statements to the accounting records and should include examining material adjustments made during the course of preparing the financial statements.
According to the standards set forth by the Public Company Accounting Oversight Board (PCAOB), an integrated audit is required for public companies in the United States. The PCAOB is a private-sector, non-profit corporation created by the Sarbanes-Oxley Act of 2002 to oversee the audits of public companies and other issuers in order to protect the interests of investors and further the public interest in the preparation of informative, accurate, and independent audit reports.
The audit of financial reporting over internal control, which is option C in the question, is a separate but related audit performed in conjunction with the integrated audit. This audit is required by Section 404 of the Sarbanes-Oxley Act and focuses on the effectiveness of a company's internal control over financial reporting.
The National Association of Insurance Commission (NAIC), which is option D in the question, is a standard-setting organization for insurance regulation in the United States. While the NAIC does establish accounting standards for insurance companies, these standards are specific to the insurance industry and are not applicable to the broader financial reporting standards that would be relevant to this question.
In summary, the correct answer to this question is A. Integrated Audit Financial Statement, as the standards for an integrated audit require the auditor's substantive procedures to include reconciling the financial statements to the accounting records and examining material adjustments made during the course of preparing the financial statements.