Final answer:
Auditors test controls in a private company's audit when initial assessment of control risk is above low, with testing intensity increasing if risk is high.
Step-by-step explanation:
In the audit of a private company, the auditor will test controls when control risk is initially assessed at a level that is considered to be more than low. This means that if the auditor believes the risk that the controls are failing to prevent or detect material misstatements is above a low threshold, they will perform tests of controls. This is an integral part of the audit process as it helps the auditor decide whether to rely on the controls and to what extent. If controls are effective, the auditor may need to perform fewer substantive tests. However, if control risks are assessed as high, the auditor is likely to perform more extensive substantive testing to verify the accuracy of the financial statements.