Take-home parts 1 and 2. Open book; you can work together. Part 1 Multiple Choice (36 points; three points each) Choose the best answer for each of the following questions. 1. In class in discussing the audit risk model we considered several cases as follows: Case Audit Inherent Control Detection Risk I.05. Risk Risk Risk DR= .60 .30 .278 AR IR XCR C II .10 .60 .30 ??? =0 What would be the desired level of detection risk for case II. Compared with Case I would the auditor expect to do more or less audit work (substantive testing)? a. .556; more audit work. .833; more audit work. b. .556; less audit work. the .833; less audit work. none of the above. e. Answer A 2. Testing sales for completeness (i.e. UNDERstatement), an auditor selects 50 sales invoices and vouches them to the respective shipping documents. This evidence is not appropriate because of the violation of: Answer 3. a. b. c. Auditor's direct knowledge. Objectivity Reliability d. Relevance Management claims that the accounts receivable amounts are real, not fictitious. What management assertion is involved? Answer a. b. c. d. Completeness Existence Rights and Obligations Valuation and Allocation 109