Question 21 (3 points) Which of the following statements about the auditor's consideration of internal control of a private company is FALSE? If an auditor believes that client does not have controls relevant to a particular assertion being tested, the auditor would choose a substantive strategy. When an auditor uses a substantive strategy, the auditor is required to test the internal controls. If an auditor believes it will not be cost-effective to rely on the internal controls. the auditor would choose a substantive strategy. When an auditor believes the internal controls are likely to be ineffective, the auditor would probably choose a substantive strategy If an auditor plans to reduce control risk below the maximum level, the auditor is planning a reliance strategy. Question 22 (3 points) Three clerks in the accounts payable department reconcile vendor statements received from vendors to the vendor balances in the accounts payable subsidiary ledger. This is typically done from the 5-10th of each month, after the monthly statements arrive from the vendors. The accounts payable supervisor reviews the reconciliations to be sure they were prepared properly. The work of the supervisor is an example of which component of the COSO framework? Control activities Risk Assessment Monitoring Information and Communication Control Environment Question 23 (3 points) A diamond shaped symbol in a flowchart would be used to represent a on-line storage computer process a decision data transformation data entry Question 24 (3 points) After obtaining an understanding of the entity and its environment, including its internal control, the auditor assesses: detection risk to determine the acceptable level of RMM audit risk to determine the acceptable level of engagement risk control risk and inherent risk to determine the acceptable level of detection risk acceptable audit risk to determine the appropriate level of RMM the need to apply substantive procedures