1. After considering the client's internal control, the auditors have concluded that it is well-designed and is functioning as anticipated. Under these circumstances, the auditors would most likely:

Select one:

a. Reduce substantive procedures in areas where the internal control was found to be effective.

b. Perform all tests of controls to the extent outlined in the preplanned audit plan.

c. Increase the extent of anticipated analytical procedures.

d. Cease to perform further substantive procedures.

2. A client's internal control appears strong, but the CPA has elected not to perform any tests of controls. The planned assessed level of control risk is at what level?

Select one:

a. Zero.

b. Maximum.

c. Low.

d. Moderate.

3. Which of the following must the auditor communicate to the audit committee?

Select one:

a. Only significant deficiencies.

b. Neither significant deficiencies nor material weaknesses.

c. Significant deficiencies and material weaknesses.

d. Only material weaknesses.

4. Which of the following is most likely to be considered a risk assessment procedure relating to internal control?

Select one:

a. Take test counts of the year-end inventory.

b. Perform a test of a control relating to payroll.

c. Trace a transaction through the information system relevant to financial reporting.

d. Confirm accounts receivable.