Final answer:
The common difficulty in auditing a sole proprietorship is the lack of formal financial records and the potential for insufficient separation between personal and business finances, exacerbating the risk to the owner's personal assets.
Step-by-step explanation:
In an audit of a sole proprietorship, a common difficulty is the lack of formal financial records or occasionally, insufficient separation between the business owner's personal and business finances. Sole proprietorships are business entities run by an individual where the distinction between the owner and the business is not legally separate. This can present challenges when trying to establish a clear financial picture for auditors. The owner's personal liability for business debts also means that their personal assets are at risk if the business encounters financial trouble.