An engagement to express an opinion on the internal control of a nonissuer will

An engagement to express an opinion on the internal

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QUESTION: 371 An engagement to express an opinion on the internal control of a nonissuer will generally: A. Require procedures that duplicate those already applied in assessing control risk during a financial statement audit. B. Increase the reliability of the financial statements that have already been audited. C. Be more extensive in scope than the assessment of control risk made during a financial statement audit. D. Be more limited in scope than the assessment of control risk made during a financial statement audit. Answer: Explanation: Choice "c" is correct. An engagement to express an opinion on internal control will generally be more extensive in scope than the assessment of control risk made during a financial statement audit of a nonissuer. This occurs because assessing control risk is the primary purpose of an engagement to express an opinion on internal control, whereas it is an incidental result of an audit of a nonissuer. Choice "a" is incorrect. Since the results of the audit may be considered in performing the engagement to express an opinion on internal control, it is unlikely that the auditor would duplicate those procedures already applied. Choice "b" is incorrect. It is unlikely that the reliability of the financial statements that have already been audited would be increased if an engagement to express an opinion on internal control is performed. Choice "d" is incorrect. An engagement to express an opinion on internal control is more extensive in scope than the control risk assessment performed during an audit of a nonissuer. C QUESTION: 372 Which of the following statements is correct concerning significant deficiencies noted in an audit of a nonissuer?
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C. Significant deficiencies should not be re-communicated each year if management has acknowledged its understanding of such deficiencies. D. The auditor should separately identify those significant deficiencies that are considered to be material weaknesses. Answer: D Explanation: Choice "d" is correct. The auditor should separately identify those significant deficiencies that are considered to be material weaknesses. Choice "a" is incorrect. Not all significant deficiencies are material weaknesses. Choice "b" is incorrect. The auditor is not obligated to search for significant deficiencies. The auditor is obligated to communicate to the client any significant deficiencies identified while auditing the financial statements. Choice "c" is incorrect. The auditor is obligated to re-communicate significant deficiencies each year, even if management has acknowledged its understanding of such deficiencies.
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