For a private company client, auditors are required to test any internal controls they believe have not been operating effectively during the period under audit.

Question

Quizplus · Accepted Answer

Auditors may assess the operating effectiveness of a private company's internal controls if they choose to or if it's necessary for their audit approach, but they are not required to test all internal controls they believe have not been operating effectively. Their primary objective is to express an opinion on the financial statements, and testing of internal controls, while it may be part of the audit, is not a requirement unless the audit is being conducted under standards that specifically require such testing (e.g., an audit in accordance with PCAOB standards for public companies). For private companies, the focus is typically on substantive procedures to gather evidence about the amounts and disclosures in the financial statements.

For a Private Company Client, Auditors Are Required to Test