The following questions deal with examining inter¬ nal controls or assessing control risk. Choose the best response.

a. The ultimate purpose of assessing control risk is to con¬ tribute to the auditor's evaluation of the

(1) factors that raise doubts about the auditability of the financial statements.

(2) operating effectiveness of internal accounting con¬ trols.

(3) risk that material misstatements exist in the financial statements.

(4) possibility that the nature and extent of substantive tests may be reduced.

b. An auditor uses assessed control risk to

(1) indicate whether materiality thresholds for planning and evaluation purposes are sufficiently high.

(2) evaluate the effectiveness of the entity's internal con¬ trols.
(3) identify transactions and account balances where inherent risk is at the maximum.
(4) determine the acceptable level of detection risk for financial statement assertions.

c. On the basis of audit evidence gathered and evaluated, an auditor decides to increase assessed control risk from that originally planned. To achieve an audit risk level that is substantially the same as the planned audit risk level the auditor would (1) increase inherent risk.
(2) increase materiality levels.
(3) decrease substantive testing.
(4) decrease planned detection risk.