1. One of the objectives of performance auditing is to assist managers by identifying and promoting better management practices. Which of the following activities would be most useful in fulfilling this objective?

a. When outcomes are inconsistent with audit criteria, seek information as to the effect of the problem. b. Provide assurance that managements internal controls are well designed and functioning as intended. c. When outcomes are inconsistent with audit criteria, seek information as to the cause of the problem. d. Provide assurance that managements reports are reliable.

2. You are undertaking the planning procedures for Rainer Ltd (Rainer) and have noted that the quick ratio has decreased significantly from 30 June 2020 to 30 June 2021 and is below that of Rainer's industry competitors. Which of the following options best explains this analysis?

a.

Long-term Borrowings were decreased by 20% in June 2021 as a result of extra cash repayments made by Rainer in that month.

b.

The company increased credit sales by 5% after offering more lenient credit terms to customers, which were 45 days instead of 30 days.

c.

Inventory as a percentage of sales has decreased over the period due to the successful marketing of a new product line for Rainer.

d.

Creditors balances have reduced between June 2020 and June 2021 due to more strict credit terms initiated by suppliers.