5. 6. 7. 8. Analytical procedures in the overall review should be: a. applied to every item on the financial statements. b. performed by the partner or manager on the engagement. c. based on financial statement data before all audit adjustments and reclassifications have been recognized. d. performed only when material misstatement is expected. e. performed only when unusual or unexpected balances and relationships are anticipated. Which of the following would not be an important factor in understanding an entity's industry, regulatory environment and other external factors? a. The competitive environment. b. The political environment. c. Relevant accounting pronouncements. d. Technological developments. e. The nature of the entity. "A significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected" is the definition of: a. a material weakness. b. a significant deficiency. c. a control deficiency. d. a material misstatement. Which of the following statements is true about an auditor's responsibility to communicate with respect to a public company's internal controls? a. The auditor will issue an adverse report on the effectiveness of internal controls if a material weakness in internal controls over financial reporting exists. b. Auditors are required to communicate all significant deficiencies in internal control to management but not necessarily to the audit committee. c. Auditors are required to communicate all significant deficiencies in internal control to the audit committee but not necessarily to management. d. The difference between a material weakness and a significant deficiency is inconsequential. e. The auditor's judgment is based on either the likelihood of the misstatement or on the potential magnitude of the misstatement