For each of the bracketed numbers in the following statements [ ], select and insert in the bracket the best word(s) to complete the statements from the answer choices below. Each choice may be used once, more than once, or not at all.

Statements

When controls are ineffective a [1- _____] assessed risk of material misstatement requires the auditor to obtain a [2- _____] level of assurance by performing further audit procedures at the assertion level.

Evidence about the effectiveness of the operation of controls obtained [3- _____] by the auditor usually provides more assurance than evidence obtained [4- _____].

A [5- _____] assessment of the risks of material misstatement reduces the audit effort applied to substantive procedures.

When various types of evidence support the same conclusion, the degree of assurance provided is usually [6- _____] than when only one type of evidence supports the conclusion.

When the auditor determines that a specific control may have a significant effect on the assessment of the RMMs, (s)he usually needs to perform testing with a [7- _____] degree of assurance instead of relying on inquiries alone.

A [8- _____] degree of subjectivity in a financial measure results in more risk for the auditor.

Some controls [9- _____] affect an assertion, which may make them important for the auditor to test.

The audit effort applied to tests of controls is likely to be [10- _____] when the auditor does not rely on controls.

Answer Choices:

A. Lower

B. Higher

C. Directly

D. Indirectly