The Primary Purpose of the Auditors' Study of Internal Control

question 67

Multiple Choice

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.

---

Definitions:

Default Risk

The possibility that a borrower will be unable to make the required payments on their debt obligations.

Marketable Securities Portfolio

A collection of liquid financial instruments and securities that can be quickly converted into cash at a value close to the market rates.

Treasury Bills

Short-term government securities with maturity periods of one year or less, sold at a discount from their face value.