For each of the following situations, indicate whether the auditor would use a primarily substantive approach or a lower control risk approach for most or all of the assertions. Give reasons for your answers. (Consider only the information given here.)

1. The company is owned and managed by one person who employs two bookkeepers, a cashier, and one individual to manage the credit department.

2. The company has a sophisticated computer system that processes hundreds of transactions daily and has an elaborate set of computer controls. Few errors have been found during tests of controls in prior audits.

3. The company has a reasonably reliable information system and fairly good control activities. All members of top management believe that internal control is "a necessary evil" and pay little attention to problems reported by the auditor.

4. The company is a small service business that carries no inventory and a few accounts receivable. There is very little long-term debt, and short-term debt is almost always paid off the next month. Limited use is made of computers.

5. The company's internal control is poorly designed and the information system produces many errors. In prior audits, considerable time was devoted to tests of controls that resulted in a small restriction of substantive tests.