5. Which of the following is not ordinarily considered a factor indicative of increased financial reporting risk when an auditor is considering a client's risk assessment policies?

Select one:

a. Corporate restructuring.

b. Implementation of a new information system.

c. Rapid growth of the organization.

d. Salaried sales personnel.

6. Tests of controls do not ordinarily address:

Select one:

a. The cost effectiveness of the way a control was applied.

b. How a control was applied.

c. The consistency with which a control was applied.

d. By whom a control was applied.

7. A significant deficiency:

Select one:

a. Is identical to a material weakness except that it need not be communicated to those responsible for oversight of the company's financial reporting.

b. Involves an amount of discovered misstatements greater than the amount used as the planning measure of materiality.

c. Is less severe than a material weakness.

d. Differs from a material weakness in that it involves internal control over operations rather than internal control over financial reporting.

8. Which of the following is not a component of the control environment?

Select one:

a. Commitment to attracting, developing, and retaining competent employees.

b. Organizational structure.

c. Integrity and ethical values.

d. Risk assessment.