1. To achieve revenue targets, S Corporation starts selling to customers that are not creditworthy. Which Controls or substantive audit procedure (the most important), if properly performed, could have discovered this on a timely basis?

2. From a financial statement perspective, why does a company need to have internal controls?

3. Control risk is the risk that the internal control will fail to prevent or detect material misstatements. There are three potential circumstances that can give rise to this risk. Describe two.

4. Describe “Tracing”? Generally, what is the most relevant assertion over which tracing provides audit evidence?