Select the correct option for each of the following four multiple choice questions

Question (i)

After obtaining an understanding of internal control and assessing control risk of an entity an auditor decided to perform tests of controls. The auditor most likely decided that:

AThe available evidence obtained through tests of controls would not support an assessment of control risk as high.

BIt would be inefficient to perform tests of controls given they would not result in reduced substantive tests.

CThe assessed level of inherent risk exceeded the assessed level of control risk.

DControl risk should be assessed as low for key financial report assertions.

Question (ii)

When control risk is assessed as less than high, tests of control should be undertaken with regard to?

ADesign of internal control.

BEffectiveness and continuity of controls that have been determined to exist.

CBoth design and operation of internal control.

DBoth the control environment and the entity's risk assessment process.

Question (iii)

Which of the following audit tests would be regarded as test of controls?

APerforming bank reconciliations for the client's trading account.

BObserving the client's warehouse staff checking shipments.

CSending an external confirmation to a debtor to check the outstanding balance at year end.

DCounting inventory and checking that the quantity is accurately recorded in the inventory records.

Question (iv)

Which of the following is the most effective control activity to detect vouchers that were prepared for the payment of goods that were not received?

ACompare goods received with goods requisitioned in the receiving department.

BCount goods upon receipt in the storeroom.

CVerify vouchers for accuracy and approval in the internal audit department.

DMatch purchase order, receiving report and supplier's invoice for each voucher in the accounts payable department.