1. Regarding audit team documentation associated with attributes sampling, which statement would be correct?

a)The audit team's documentation should include information about the control environment, including an assessment of management's integrity.

b)The audit team should document information regarding the number of deviations and sample deviation rate, but not the allowance for sampling risk.

c)The audit team's documentation should include information regarding all steps of the sampling process and implications of the conclusions reached on internal control reliance and substantive procedures.

d)The audit team's conclusions do not need to be documented unless they decide to rely on internal control at planned levels.

2. An auditor has identified the controller's review of the bank reconciliation as a control to test. In connection with this test, the auditor interviews the controller to understand the specific data reviewed on the reconciliation. In addition, the auditor verifies that the bank reconciliation is properly prepared by the accountant and reviewed by the controller as evidenced by their respective sign-offs. Which of the following types of audit procedures do these actions illustrate?

a)Confirmation and reperformance.

b)Observation and inspection of records.

c)Analytical procedures and reperformance.

d)Inquiry and inspection of records.

3. When testing internal controls, which of the following statements is not true with respect to the use of nonstatistical sampling?

a)Nonstatistical sampling does not require the use of random selection techniques.

b)When using nonstatistical sampling, auditors are required to quantify the parameters used to determine sample size.

c)Auditors are required to use professional judgment in evaluating the sample results in a nonstatistical sampling application.

d)Nonstatistical sampling is permitted in the audits of both public and nonpublic entities.

4. To determine whether sales transactions have been recorded in the proper accounting period, the auditor performs cutoff tests. Which of the following best describes the overall approach used when performing cutoff tests?

a)Analyze transactions occurring within a few days before and after year-end.

b)Ascertain that management has included in the representation letter a statement that transactions have been accounted for in the proper accounting period.

c)Examine cash receipts in the subsequent period.

d)Confirm year-end transactions with regular customers.

5. Which of the following statements best describes why an auditor would use only substantive procedures to evaluate specific relevant assertions and risks?

a)The cost of substantive procedures will exceed the cost of testing the relevant controls.

b)The relevant internal control components are not well documented.

c)Testing the operating effectiveness of the relevant controls would not be efficient.

d)The internal auditor already has tested the relevant controls and found them effective.

6. If the auditor were interested in ensuring that all sales have been recorded, the population would be defined as:

a)remittance advices.

b)entries in the cash receipts journal.

c)shipping documents.

d)entries in the general journal.

7. When auditing financial statements of a private company, the minimum work an auditor must perform in connection with a company's internal control is best described by which of the following statements?

a)Perform exhaustive tests of accounting controls and evaluate the company's control system effectiveness.

b)Determine whether the company's control policies are designed well enough to prevent material misstatements.

c)Design procedures to search for significant deficiencies in the actual operation of the company's internal control.

d)Prepare auditing working papers that document the auditor's understanding of the company's internal control.

8. Test of controls sample size varies inversely with:

a)expected population deviation rate: No; tolerable rate of deviation: Yes.

b)expected population deviation rate: Yes; tolerable rate of deviation: No.

c)expected population deviation rate: No; tolerable rate of deviation: No

d)expected population deviation rate: Yes; tolerable rate of deviation: Yes.

9. What would most likely be associated with an auditor's determination of a lower level of control risk?

a)smaller samples for substantive procedures.

b)larger population sizes for tests of controls.

c)larger samples for substantive procedures.

d)lower levels of detection risk.