MCQ: 1. In a well-run business with a corporate code of ethics that is demonstrated and enforced by management, the auditor will decide that a) inherent and control risks can be reduced. b) there is an increased risk of fraud or illegal activities. c) inherent and control risks need to be increased. d) there is a need for more detailed documentation in the working papers. 2. Assuming the items are material, which of the following requires note disclosure? a) the correction of an error in the prior year's financial statement resulting from a mathematical mistake in capitalizing interest b) a change in the estimate of provisions for warranty costs c) a change in depreciation method that has no effect on the current year's financial statements but is certain to affect future years d) the acquisition of a new building