Under Auditing Standard 5, passed in mid-2007, the audit of internal control over financial reporting is now integrated with the audit of the financial statements.

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The independent external auditor is a licensed professional who works for a public accounting firm and performs an audit of the financial statements of a company, government, individual, or any other legal entity or organization.

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The resulting lack of audit work can result in an auditor disclaiming an opinion on the financial statements.

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Rather, it means that the inspection staff has determined that, because of an identified error or omission, the firm failed to fulfill its fundamental responsibility in the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.

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During the last four years, Deloitte has issued non-qualified audit opinions on the financial statements, in spite of ongoing material weaknesses in internal controls over their financial reporting.

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Those companies would have otherwise experienced the ignominy of admitting that a non-independent audit firm had attested to prior-filed financial statements.

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