The primary purpose of the auditors' study of internal control for a nonpublic entity is:
A)To provide constructive suggestions to the client for improving its internal control.
B)To report on internal control as required by Auditing Standard No.5.
C)To identify and detect fraud and irregularities perpetrated by client personnel.
D)To determine the nature,timing,and extent of further audit procedures.

Question

Quizplus · Accepted Answer

The primary purpose of the auditors' study of internal control for a nonpublic entity is to determine the nature, timing, and extent of further audit procedures. This helps auditors to assess the risk of material misstatement in the financial statements and design appropriate audit procedures to address that risk. While auditors may provide constructive suggestions to the client for improving internal control, their primary focus is on assessing the effectiveness of existing controls for the purposes of the audit. Reporting on internal control as required by Auditing Standard No. 5 is also an important objective, but it is not the primary purpose of the auditors' study of internal control. Identifying and detecting fraud and irregularities is an important aspect of the audit, but again, it is not the primary purpose of the auditors' study of internal control.

The Primary Purpose of the Auditors' Study of Internal Control