1.) While substantive procedures may support the accuracy of underlying records, these tests frequently provide no affirmative evidence of segregation of duties because

	A.	The records may be accurate even though they are maintained by persons having incompatible functions.
	B.	Substantive procedures rarely guarantee the accuracy of the records if only a sample of the transactions has been tested.
	C.	Substantive procedures relate to the entire period under audit, but compliance tests ordinarily are confined to the period during which the auditor is on the entity's premises.
	D.	Many computerized procedures leave no audit trail of who performed them, so substantive procedures may necessarily be limited to inquiries and observation of office personnel.

2.) The risk of incorrect ______ relates to the effectiveness of an audit, while the risk of incorrect _______ relates to the of an audit.

3.) The risk assessment component of internal control refers to

	A.	The entity's assessment of the potential for material misstatements.
	B.	The auditor's assessment of client risk.
	C.	The auditor's assessment of control risk.
	D.	The entity's identification and analysis of risks relevant to achievement of its objectives.

4.) The concept of reasonable assurance in the context of an entity's internal controls recognizes that

	A.	Auditors may fail to detect material misstatements.
	B.	The potential benefits of a control should outweigh the cost of implementing the control
	C.	Well designed internal controls guarantee that material misstatements cannot occur.
	D.	Well designed internal controls prevent all fraud from occurring.