1. Which of the following controls is least likely to be tested on an interim basis? a control that has historically been ineffective a control that relates to an account with low inherent risk a control that is performed by competent personnel a control that has historically been effective

2. A key advantage of statistical sampling over nonstatistical sampling is that statistical sampling helps an auditor to: A. minimize nonsampling risk B. quantify sampling risk C. reduce the level of audit risk D. promote consistency throughout audits of different accounts and different engagements

3. Even very sophisticated systems of internal control are still subject to certain inherent limitations. Examples of such limitations include: Management override Employee incompetence Collusion All of the above None of the above

4.We discussed in class that both management and the auditor follow a top-down, risk-based approach when performing their respective assessments of the effectiveness of ICFR. Why did Auditing Standard (AS) No. 5 emphasize the top-down, risk-based approach to such an extent? A. This approach ultimately directs auditors time and energy to areas, accounts, and assertions that have the highest possibility of being materially misstated. B. This approach represented a shift from the former approach to ICFR assessment prescribed by AS No. 2. Under AS2, 404 assessments generally consisted of treating all controls as equally important, and spending equal time and energy testing each control. C. Both A&B D. Neither A nor B

5.In an audit of financial statements, an auditors primary consideration regarding a control is whether it: enhances managements decision-making processes reflects managements philosophy and operating style affects managements financial statement assertions provides adequate safeguards over access to assets