4. In most audits of large companies, internal control risk assessment contributes to audit efficiency, which means: (a) (b) (e) (d) The cost of year end audit work will exceed the cost of control evaluation work. The cost of audit work. control evaluation work will exceed the cost of year end Auditors will be able to reduce the cost of year end audit work by an amount less than the control evaluation costs. Auditors will be able to reduce the cost of year end audit work by an amount more than the control evaluation costs. 5. Audit procedures to test internal controls are required for (a) Obtaining evidence about the operating effectiveness of client control activities (b) Obtaining evidence about the financial statement assertions. (c) Accomplishing control over the validity of recorded transactions. (d) Analytical review of financial statement balances. 6. When auditing financial statements and finding indications of a possible misappropriation of assets, independent auditors should first: (a) Immediately report the misappropriation to those individuals charged with governance of the organization so they can take appropriate action. (b) Determine the methods by which the misappropriation was carried (e) Identify a person(s) who are likely responsible for the (d) Determine which accounts are affected and the amount by which they out misappropriation and obtain evidence about some other fraud indications in their work. are overstated or understated. Which of the following is ordinarily considered an "extended procedure" in the external auditors' independent audits of financial statements? (a) 7. (b) (c) (d) Perform physical observation and test count during the client's inventory taking. Measure the time lag between the date of recording cash receipts in the books to the date of deposit credit in the bank. Conduct interviews with the client's sales billing personnel to learn about sales recording control procedures. Send positive confirmations on recorded customer accounts receivable balances