1.Which of the following is most correct for audits of non-public companies?

An audit of internal control is required.

An audit of internal control is not required.

An audit of the design of internal controls is required.

An audit of the operational effectiveness of internal controls is required.

2.

For financial statement audits, auditors need to understand controls that are relevant to the audit in order to

		identify and assess the risks of material misstatements.
		perform preliminary analytical procedures.
		detect fraud.
		assess inherent risk.

3.

Which deficiency exists if a necessary control is missing or not properly implemented?

		control
		significant
		design
		operating

4.

Which of the following is the correct definition of "control deficiency"?

		A control deficiency exists if the design or operation of controls does not permit company personnel to prevent or detect misstatements on a timely basis.
		A control deficiency exists if one or more deficiencies exist that adversely affect a company's ability to prepare external financial statements reliably.
		A control deficiency exists if the design or operation of controls results in a more than remote likelihood that controls will not prevent or detect misstatements.
		A control deficiency exists if the design or operation of controls results in a more than probable likelihood that controls will prevent or detect misstatements.