Question 5

If a client relies on information technology (IT) controls and the auditor plans to assess control risk as low for payroll assertions, the auditor will usually do all of the following, EXCEPT _______.

		Q. test the effectiveness of manual controls
		R. use computer-assisted audit techniques (CAATs) to evaluate the effectiveness of IT application controls
		S. test the effectiveness of manual procedures to follow up on exceptions
		T. All of the answer choices are correct.

Question 6

Top performing companies within an industry generate significant free cash flow and_______.

		A. are more likely to have significant balances of cash and cash equivalents
		B. are more likely to have lower balances of cash and cash equivalents
		C. typically incur higher rates of interest on greater debt balances
		D. should consider returning the cash to the firms stockholders and creditors in the form of stock dividends

Question 7

An important aspect of developing a preliminary audit strategy involves _______.

		A. understanding the entity and its environment
		B. understanding the industry that the auditor operates in
		C. determining what audit opinion management would like the auditor to issue
		D. confirming certain account balances with the internal audit function