If a companys control risk is initially assessed as low, the auditor needs to gather evidence on the operating effectiveness of the controls. For each of the following control activities listed as (1)(10), do the following two tasks:

a. Describe the test of control that the auditor would use to determine the operating effectiveness of the control.

b. Briefly describe how substantive tests of account balances should be modified if the auditor finds that the control is not working as planned. In doing so, indicate (a) what misstatement could occur because of the control deficiency, and (b) how the auditors substantive tests should be expanded to test for the potential misstatement.

4. The accounts receivable bookkeeper is not allowed to issue credit memos or to approve the write-off of accounts.

A)

B)