1. What are the objectives of Internal Control:

a. Operations, Reporting, and Compliance

b. Operations, Risk Assessment, Documentation

c. Risk Assessment, Control Activities, Monitoring

d. Control Activities, Reporting, Flow Charts

2. Identify which steps are involved in understanding and assessing of control risk a. Understand and document entity level controls; and understand the flow of transactions

b. Identify what can go wrong for financial statement assertions; and identify and document relevant transaction level controls

c. Evaluate strength and weaknesses and determine preliminary audit strategy; and perform tests of controls

d. All of the above

3. Provide an example of an entity level control: _____________________________________________

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4. Provide an example of a transaction level control:___________________________________________

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5. Identify two ways an auditor can document his or her understanding of the system of internal control:

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6. The independent auditor's plan for an examination in accordance with generally accepted auditing standards is influenced by the possibility of material misstatements. The auditor will therefore conduct the examination with an attitude of:

a. Subjective mistrust.

b. Professional skepticism.

c. Professional responsiveness.

d. Objective indifference.

7. When an auditor inspects loan documentation and traces the details to recording in the clients records, the auditor is gathering evidence to support the:

1. rights and obligations assertion.
2. valuation and allocation assertion.
3. completeness assertion.
4. existence assertion.

8. The cutoff assertion deals with ________.

1. ensuring accounts are appropriately valued
2. ensuring amounts are recorded in the correct accounts
3. transactions and events have been recorded in the correct accounting period
4. ensuring that assets, liabilities and equity interests exist

9. The sufficiency of audit evidence refers to the _______.

1. logical connection with the assertion being tested
2. source, form, or nature of the audit evidence
3. quantity of audit evidence gathered
4. quality of audit evidence gathered

10. A primary objective of procedures performed to obtain an understanding of internal control is to provide an auditor with

1. A basis from which to modify tests of controls.
2. Audit evidence to use in reducing detection risk.
3. Knowledge necessary to assess the risk of misstatement.
4. Information necessary to prepare flowcharts.