Significantly fewer responses to confirmation requests are received than expected. [Case 2] Transactions selected for testing are not supported by proper documentation. [Case 3] A. B. C. D. Significant deficiencies in internal control previously communicated to management are not corrected. Case 4 Differences between reconciliations of control accounts and subsidiary records are not investigated. [Case 51 Negative confirmation requests yield fewer responses than in the prior year's audit. 10. Choose correct or incorrect statements. @[Case 1] is an example that an auditor may suspect that material misstatements arising from fraud exist in a client's financial statements. On the contrary, [Case 5] corresponds to a reduced likelihood of material misstatement, Because responses to negative confirmations are only received when there are discrepancies. a lower response rate of the negative confirmations likely would be indicative of fewer problems with accounts receivable. Q Correct statement Incorrect statement Incorrect statement Correct statement (6) Correct statement Incorrect statement. Correct statement Incorrect statement 11. Choose correct or incorrect statements. @[Case 3] vs. [Case 5] Of these cases, an auditor may evaluate that [Case 3] situation is more suspicious about material misstatements of the client's financial statements than [Case 5] situation. 6 [Case 1] vs. [Case 2] Of these cases, an auditor may evaluate that [Case 1] situation is more suspicious about material misstatements of the client's financial statements than [Case 2] situation. In [Case 4], This case is just simple mistakes of client's employees. Therefore, [Case 4] is not an example to be suspicious about material misstatement of the client's financial statements. A. B. C. D. Correct statement Incorrect statement Correct statement Incorrect statement A. B. C. D. b 12. Choose correct or incorrect statements. Correct statement Incorrect statement Incorrect statement Correct statement Correct statement Incorrect statement Incorrect statement Correct statement @If client's internal auditor produce many exception report, this imply that client's internal control system is poorly designed and operated. 6 'Separation of authorization, recording and custody' is no control environment, instead, this element is control activity. b Correct statement Incorrect statement Correct statement Incorrect statement Incorrect statement Incorrect statement Incorrect statement Correct statement