After obtaining an understanding of internal control and assessing control risk of an entity an auditor decided to perform tests of controls. The auditor most likely decided that:

A The available evidence obtained through tests of controls would not support an assessment of control risk as high.

B It would be inefficient to perform tests of controls given they would not result in reduced substantive tests.

C The assessed level of inherent risk exceeded the assessed level of control risk.

D Control risk should be assessed as low for key financial report assertions.

Question (ii) When control risk is assessed as less than high, tests of control should be undertaken with regard to? A Design of internal control.

B Effectiveness and continuity of controls that have been determined to exist.

C Both design and operation of internal control.

D Both the control environment and the entitys risk assessment process.

Question (iii) Which of the following audit tests would be regarded as test of controls?

A Performing bank reconciliations for the clients trading account.

B Observing the clients warehouse staff checking shipments.

C Sending an external confirmation to a debtor to check the outstanding balance at year end.

D Counting inventory and checking that the quantity is accurately recorded in the inventory records.

Question (iv) Which of the following is the most effective control activity to detect vouchers that were prepared for the payment of goods that were not received?

A Compare goods received with goods requisitioned in the receiving department.

B Count goods upon receipt in the storeroom.

C Verify vouchers for accuracy and approval in the internal audit department.

D Match purchase order, receiving report and suppliers invoice for each voucher in the accounts payable department.