The primary purpose for obtaining an understanding of a nonpublic audit client's internal control is to
A) Provide a basis for making constructive suggestions in a management letter.
B) Determine the nature, timing, and extent of tests to be performed in the audit.
C) Provide the rationale for the inherent risk assessment at the financial statement assertion level.
D) Provide information for a communication of internal control-related matters to management.

Question

Quizplus · Accepted Answer

The primary purpose of obtaining an understanding of a nonpublic audit client's internal control is to determine the nature, timing, and extent of tests to be performed in the audit. This understanding helps the auditor to identify areas of increased risk, plan the audit procedures accordingly, and assess control risk. Options A, C, and D may be secondary purposes, but not the primary purpose.

The Primary Purpose for Obtaining an Understanding of a Nonpublic