The following questions relate to various aspects of selecting audit procedures. Select the best response.

a. The sequence of steps in gathering evidence as the basis of the auditor's opinion is 

1. Substantive tests, understanding the internal control structure, and tests of controls.

2. Understanding the internal control structure, substantive tests, and tests of controls.

3. Understanding the internal control structure, tests of controls, and substantive tests.

4. Tests of controls, understanding the internal control structure, and substantive tests.

b. Each of the following might, in itself, form a valid basis for an auditor to decide to omit a test except the 

1. Relative risk involved. 

2 Relationship between the cost of obtaining evidence and its usefulness.

3. Difficulty and expense involved in testing a particular item. 

4. Assessed level of control risk. 

c. An independent auditor has concluded that the client's records, procedures, and representations can be relied upon based on tests made during the year when internal control structure policies and procedures were found to be effective. The auditor should test the records, procedures, and representations again at year-end if 

1. Inquiries and observations lead the auditor to believe that conditions have changed significantly. 

2. Comparisons of year-end balances with like balances at prior dates revealed significant fluctuations. 

3. Unusual transactions occurred subsequent to the completion of the interim audit work. 

4. Client records are in a condition that facilitate effective and efficient testing.