The Auditor's Communication of Material Weaknesses in Internal Control for a Nonpublic

question 31

Multiple Choice

The auditor's communication of material weaknesses in internal control for a nonpublic company is:

• A)required to enable the auditor to state that the examination has been made in accordance with generally accepted auditing standards.
• B)the principle reason for studying and evaluating the system of internal controls.
• C)required even though the financial statement audit for private companies does not require an audit of the entity's system of internal control.
• D)required to be included as part of the audit opinion.

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Definitions:

Existing Businesses

Companies or enterprises that have been operational for a period of time and are not newly established.

Franchises

Business models where individuals can buy the rights to open and operate a location of a larger company.

Capital Intensive

A characteristic of businesses that require large investments in capital assets, like machinery and equipment, to produce goods or services.

Labor Intensive

Describes a process or industry that requires a large amount of labor to produce its goods or services, compared to the amount of capital used.