The following questions relate to possible responsibilities of the independent auditor concerning internal control. Select the best response. a When the auditor assesses control risk at the maximum level for a specific assertion: 

1. The auditor need not document the assessment. 

2. The auditor must document the assessment but need not document the basis for that assessment. 

3. The auditor must document both the assessment and the basis for it. 

4. The extent of documentation is not related to the level of assessed risk, but rather to the complexity and sophistication of the company's operations and systems. 

b. Which of the following statements regarding auditor documentation of the client's internal control structure is correct? 

1. Documentation must include flowcharts. 

2. Documentation must include procedural writeups. 

3. No documentation is necessary although it is desirable. 

4. No one particular form of documentation is necessary, and the extent of documentation may vary. 

c. Which of the following is not a reason to assess control risk at the maximum level? 

1. internal control structure policies or procedures are unlikely to pertain to an assertion 

2. internal control structure policies or procedures are unlikely to be effective 

3. the auditor has assessed detection risk at the maximum level 

4. evaluating the effectiveness of the internal control structure policies or procedures would be more time-consuming than another audit approach

d. The Foreign Corrupt Practices Act requires that 

1. Auditors engaged to audit the financial statements of publicly held companies report all illegal payments to the SEC.

2. Publicly held companies establish independent audit committees to monitor the effectiveness of their internal control structure.

3. U.S. firms doing business abroad report sizable payments to non-U.S. citizens to the Justice Department.

4. Publicly held companies devise and maintain an adequate internal control structure.