Final answer:
The most important provision recommended by an internal auditor for a contract to purchase a business application from a small start-up is the Source code escrow clause, as it secures access to the software's source code, helping ensure business continuity even if the startup fails. Hence, option (A) is correct.
Step-by-step explanation:
The most important provision for an internal auditor to recommend inclusion in a contract for the purchase of a business application system from a small start-up company is A. Source code escrow clause. This clause is critical because it ensures that the purchasing company can access the source code if the start-up company fails or is unable to continue supporting the software.
Having a source code escrow clause addresses the risk of software obsolescence and maintains business continuity. It's also important due to the inherent instability of small start-ups; should the company go out of business, the purchasing entity can still maintain and update the software as necessary.
While a copyright clause, right to audit clause, and limitation of liabilities clause are beneficial to have in the contract, they do not provide the same level of protection and assurance as the source code escrow in terms of software longevity and operational security for the purchasing business. This makes the source code escrow the more strategic choice for safeguarding the business's interests in the long term.