After completing the testing of controls over cash receipts and sales adjustments, the auditor assesses the level of control risk to be higher than expected. How would this affect the auditors substantive audit work on accounts receivable?

A) More work would need to be performed to ensure that the allowance for doubtful debts is fairly stated.

B) Less work would need to be performed on following up non-responses from the auditors debtors circularisation.

C) The auditor may consider changing the date of the debtors circularisation from one month before the year-end, to the actual year-end date.

D) More analytical review tests could be performed on debtors as a substitute for other substantive tests.

2. When equipment items are purchased for cash

A. the inherent risk in the accuracy, valuation and allocation assertions objectivity is low.

B. the inherent risk in the accuracy, valuation and allocation assertions are not affected.

C. the inherent risk in the existence and occurrence and allocation assertions is high.

D. the inherent risk in the accuracy, valuation and allocation assertions is zero.

3. Which of the following is correct concerning the inspecting and counting of securities on hand?

A. A receipt should be provided by the auditor to the custodian when the securities are returned.

B. The auditor should observe the brokers advice number on the document.

C. All securities should be controlled by the auditor until the count is completed.

D. All of the above are correct.

4. Which of these controls would be the most effective in assuring that the proper custody of assets in the investing cycle is maintained?

A. The recorded balances in the investment subsidiary ledger are periodically compared with the contents of the safety deposit box by independent personnel.

B. Direct access to securities in the safety deposit box is limited to only one corporate officer.

C. Personnel who post investment transactions to the general ledger are not permitted to update the investment subsidiary ledger.

D. The purchase and sale of investments are executed on the specific authorization of the board of directors.