When Communicating Internal Control-Related Matters Noted in an Audit of a Nonpublic

question 42

Multiple Choice

When communicating internal control-related matters noted in an audit of a nonpublic company,an auditor's report issued on significant deficiencies should indicate that

• A) Errors or fraud may occur and not be detected because there are inherent limitations in any internal control system.
• B) The issuance of an unqualified opinion on the financial statements may depend on corrective follow-up action.
• C) The deficiencies noted were not detected within a timely period by employees in the normal course of performing their assigned functions.
• D) The purpose of the audit was to report on the financial statements and not to provide assurance on internal control.

---

Definitions:

Firm Offer

an offer in contract law that remains valid for a certain period of time and cannot be withdrawn during that period by the offeror.

Written Offer

A formal proposal presented in written form, detailing the terms under which the offeror is willing to engage in a transaction or agreement.

Complete

Fully executed or finished with all necessary components or steps fulfilled.

Material Terms

These are the essential conditions and clauses in a contract or agreement that affect its operation, including any rights, obligations, and duties of the parties involved.