1. Analytical procedures used in planning an audit should focus on identifying
   1. the various assertions that are embodied in the financial statement
   2. areas that may represent specific risks relevant to the audit
   3. material weakness in internal controls
   4. the predictability of financial data from individual transactions

2. Which of the following is not correct about materiality?
   1. An auditor considers materiality for planning purposes in terms of the largest aggregate level of misstatement that could be considered material to any one of the financial statements
   2. Materiality judgments are made in light of surrounding circumstances and necessarily involve both qualitative and quantitative judgments.
   3. The concept of materiality recognizes that some matters are important for fair presentation of the financial statements in conformity with accounting standards, whereas other matters are not important.
   4. An auditors consideration of materiality is influenced by the auditors perception of the needs of a reasonable person who will rely on the financial statements.

3. Which of the following would be least likely to be included in a standard inquiry to the clients attorney?
   1. a list provided by the client of pending litigation or asserted or unasserted claims with which the attorney has had some involvement.
   2. a request for the attorney to opine on the correct accounting treatment associated with an outstanding claim or pending lawsuit outcome.
   3. a request that the attorney provide information about the status of pending litigation.
   4. a request for the attorney to identify any pending litigation or threatened legal action not identified on a list provided by the client.

4. To test the effectiveness of controls, an auditor ordinarily selects from a variety of techniques, including:
   1. Confirmation
   2. Comparison
   3. Analysis
   4. Reperformance

5. Because of the risk of material misstatements due to fraud (fraud risk) , an audit of financial statements in accordance with generally accepted auditing standards should be performed with an attitude of:
   1. Independent integrity
   2. Professional skepticism
   3. Objective e judgment
   4. Independence

6. The auditor faces a risk that the audit will not detect material misstatements that occur in the accounting process. To minimize this risk, the auditor relies primarily on :
   1. Substantive tests
   2. Tests of controls
   3. Internal controls
   4. Statistical analysis

7. Inherent risk and control risk differ from planned detection risk in that they
   1. Arise from misapplication of auditing procedures
   2. May be assessed in either quantitative and nonquantitative terms
   3. Exist independently of the financial statement audit
   4. Can be changed at the auditors discretion

8. Which of the following statements is correct concerning the concept of materiality?
   1. Materiality is determined by reference to guidelines established by the GAAS
   2. Materiality is determined by reference to guidelines established by the AICPA
   3. Materiality depends only on the dollar amount of an item relative to other items in the financial statements
   4. Materiality is a matter of professional judgment

9. If an independent audit leading to an opinion on financial statements causes the auditor to believe that a material misstatement due to fraud exists, the auditor should first
   1. Consider the implications for other aspects of the audit and discuss the matter with the appropriate levels of management
   2. Consider the implications for other aspects of the audit and discuss the matter with the appropriate members of the audit committee of the board.
   3. Make the investigation necessary to determine whether fraud has actually occurred
   4. Request that management investigate to determine whether fraud has actually occurred

10. Subsequent events for reporting purposes are defined as events that occur subsequent to the
    1. Balance sheet date
    2. The date of the auditors report
    3. The balance sheet date but before the auditors report
    4. The date of the auditors report and concern contingencies that are not reflected in the financial statements