Choice "B" is correct. Conditions noted by the auditor that are significant deficiencies or material weaknesses should be reported in writing. Any report issued on such conditions should (1) indicate that the purpose of the audit was to report on the financial statements and not to provide an opinion on internal control; (2) include the definition of a material weakness and, if applicable, significant deficiency; (3) include a restriction on use (i.e., the report is intended solely for the information and use of management, those charged with governance, etc.).Choice "a" is incorrect. During an audit, the auditor is not required to design tests specifically to detect significant deficiencies or material weaknesses in internal control.Choice "d" is incorrect. Significant deficiencies in internal control are not generally disclosed in the annual report, and the auditor's letter on internal control matters observed during a financial statement audit is intended solely for the information and use of management, those charged with governance, and others within the organization.Choice "c" is incorrect. Management does not provide an assertion concerning the effectiveness of internal control as part of a financial statement audit of a nonissuer (but would provide such an assertion in a separate engagement related to internal control).