In an audit of financial statements of a nonissuer in accordance with generally accepted auditing standards, an auditor is required to

Multiple Choice

A) determine whether control activities are operating effectively to prevent or detect material misstatements.

B) search for significant deficiencies in the operation of the internal controls.

C) document the auditors understanding of the entitys internal control.

D) perform tests of controls to evaluate the effectiveness of the entitys accounting system.

2. Which of the following characteristics does not describe internal control?

Multiple Choice

process

dynamic

All characteristics describe internal control.

absolute

3. Which of the following statements is correct with respect to the elements of the "fraud triangle"?

Multiple Choice

Fraud is most common when these three factors exist together.

Motive is a cause that pressures people into action.

Opportunity refers to a situation that allows someone with motive to carry out fraud.

A lack of integrity describes a person who does not stick to the social or organizational ethical code.