9. Which of the following statements is correct concerning the understanding of internal control needed by auditors?

Select one:

a. The auditors must understand the control environment, risk assessment, and all control activities.

b. The auditors must understand monitoring and all preliminary accounting controls.

c. The auditors must have a sufficient understanding to assess the risks of material misstatement.

d. The auditors must understand the information system, not the accounting system.

10. The effectiveness of controls is not generally tested by:

Select one:

a. Inquiries of appropriate client personnel.

b. Performance of analytical procedures.

c. Inspection of documents and reports.

d. Observation of the application of accounting policies and procedures.

11. Which of the following is not considered one of the five major components of internal control?

Select one:

a. Control activities.

b. Risk assessment.

c. Monitoring.

d. Physical controls.

Which of the following is not ordinarily a procedure for documenting an auditor's understanding of internal control for planning purposes?

Select one:

a. Flowchart.

b. Questionnaire.

c. Confirmation.

d. Checklist.

13. After obtaining an understanding of internal control and arriving at a preliminary assessed level of control risk, an auditor decided to perform tests of controls. The auditor most likely decided that:

Select one:

a. There were many internal control deficiencies that would allow misstatements to enter the accounting system.

b. An increase in the assessed level of control risk is justified for certain financial statement assertions.

c. Additional evidence to support a reduction in the assessed level of control risk is not available.

d. It would be efficient to perform tests of controls that would result in a reduction in planned substantive procedures.