Question 1:Why is it important for the auditor to consider the risk of material mis-statement at the overall financial statement level?

Question 2: What two aspects of internal control must the auditor assess when performing procedures to obtain an understanding of internal control?

Question 3: Explain how the calculation and comparison to previous years of the gross margin percentage and the ratio of accounts receivable to sales are related to the confirmation of accounts receivable and other tests of the accuracy of accounts receivable.

Question 4: Explain why the auditor can be persuaded only with a reasonable level of assurance, rather than convinced, that the financial statements are correct

Question 5: What is the purpose of the clients performance measurement system? How might that system be useful to the auditor? Give examples of key performance indicators for the following businesses: (1) a chain of retail clothing stores; (2) an Internet portal; (3) a hotel chain.