1. Which of the following is most likely not a reason to perform tests of controls? a. Risk of material misstatement is assessed at a lower level. b. Performing tests of controls will be more efficient than performing substantive testing. c. The auditor believes weaknesses exist in the internal control design. d. The auditor believes the internal controls can be relied on. 2. The purpose of segregating the duties of hiring personnel and distributing payroll checks is to separate the a. Authorization of transactions from the custody of related assets. b. Operational responsibility from the recordkeeping responsibility c. Human resources function from the controllership function. d. Administrative controls from the internal accounting controls 6. Which of the following is a complete and accurate list of the walkthrough procedures usually performed in an issuer's integrated audit? a. Inquiry, observation, analytical procedures, testing of controls. b. Inquiry, sampling, analytical procedures, testing of controls. c. Inquiry, observation, inspection of relevant documentation, reperformance of controls. d. Inquiry, inspection of relevant documentation, sampling, reperformance of controls. 10. After obtaining an understanding of the internal control structure and assessing control risk of an entity, an auditor decided not to perform tests of controls. The auditor most likely decided that a. The available evidential matter obtained through tests of controls would not support an increased level of control risk. b. A reduction in the assessed level of control risk is justified for certain financial statement assertions. c. It would be inefficient to perform tests of controls that would result in a reduction in planned substantive tests. d. The assessed level of inherent risk exceeded the assessed level of control risk. 13. An auditor engaged to audit an issuer has communicated to the audit committee a concern about a material management estimate related to goodwill impairment. The account includes subjective and especially challenging calculations that involve significant auditor judgment. In what section of the audit report would this matter be required to be included? a. Explanatory paragraph. b. Critical audit matters paragraph. c. Basis for audit opinion paragraph. d. Opinion on the financial statements paragraph 22. An auditor's standard report on financial statements should refer to generally accepted auditing standards (GAAS) and generally accepted accounting principles (GAAP) in which paragraphs? a. Introductory paragraph in GAAS, Auditor responsibility paragraph in GAAP. b. Auditor responsibility paragraph in both GAAS and GAAP. c. Auditor responsibility paragraph in GAAS. Opinion paragraph in GAAP. d. Introductory paragraph in GAAS, Opinion paragraph in GAAP