1. Narratives, flowcharts, and internal control questionnaires are three commonly used methods of

A. documenting theauditor's understanding of internal controls.

B. testing internal controls.

C. documenting theauditor's understanding of theclient's organizational structure.

D. designing the audit manual and procedures.

2. When the auditor attempts to determine the operation of the accounting system by tracing one or a few transactions through the accountingsystem, this is referred to as

A. a walkthrough.

B. vouching.

C. tracing.

D. tests of controls.

3. Jenny is the information technology support manager at CMH. Jenny is considered to be a superuser at CMH since she can circumvent normal controls. In order to address the risk of superusers, management should

A. ensure that the superuser is familiar with the code of conduct of the company.

B. update the background check on the superuser on a yearly basis.

C. establish effective compensating controls.

D. remove the superuser.

4. When a compensating controlexists, a weakness in the system

A. could cause a materialloss, so it must be tested using substantive procedures.

B. is no longer a concern because the potential for misstatement has been sufficiently reduced.

C. is reduced but notremoved; therefore, it is still of concern to the auditor.

D. is magnified and must be removed from the sampling process and examined in its entirety.

5. The internal control objective of accuracy is related to the financial statement assertion of

A. Completeness.

B. Presentation.

C. Valuation.

D. Occurrence.

6. After considering aclient's internalcontrols, an auditor has concluded that the internal controls are well designed and are functioning as intended. Under thesecircumstances, the auditor would most likely

A. use a combined audit approach that includes tests of controls and substantive tests.

B. determine the control procedures that should prevent or detect errors and irregularities.

C. determine whether transactions are recorded to permit preparation of financial statements in accordance with generally accepted accounting principles.

D. perform tests of controls to the extent outlined in the audit program.

7. A procedure that would most likely be used by an auditor in performing tests of control procedures that involve segregation of functions and that leave no transaction trail is

A. observation.

B. reconciliation.

C. inspection.

D. reperformance.

8. The procedures to test effectiveness of control policies and procedures in support of a reduced assessed control risk are called

A. tests of details of balances.

B. a walkthrough.

C. analytical procedures.

D. tests of controls.

9. Each key control that the auditor intends to rely on must be supported by sufficient

A. tests of controls.

B. analytical review procedures.

C. reperformance procedures.

D. tests of details of balances.

10. Ideally, tests of controls should be applied to controls

A. for the entire period under audit.

B. at each quarterly interim period.

C. at the beginning of the fiscal period.

D. at the balance sheet date.