1. Tests of controls are not a form of audit evidence.

Select one:

True

False

2.If the preliminary assessment of internal controls suggests that controls cannot be relied on, the auditor should go straight to performing substantive testing.

Select one:

True

False

3.Answer each of the following by matching it to the correct answer:

Control risk has been assessed as low and detection risk is high. What type of substantive procedures are the auditors more likely to use?

Choose...

• Analytical procedures
• Low
• Smaller
• Year end
• High

i. Control risk has been assessed as low and detection risk is high. What size sample are the auditors more likely to use?

ii.The auditor has decided that they will use a larger sample for confirmations at year end. What is the level of detection risk?

iii. Control risk has been assessed as high and detection risk is low. What is the timing of the substantive procedures likely to be?

iv. The auditor has decided that they will do more tests of details of balances and use larger samples. What is the likely level of control risk?

4.Where the auditor decides to use a substantive approach to obtaining evidence, it is not necessary to obtain an understanding of internal controls to assess the risk of possible financial statement misstatements.

Select one:

True

False

5.Assessing control risk at a level below high most likely would involve identifying specific internal controls relevant to specific assertions.

Select one:

True

False

6.With good results from tests of controls, an auditor will most likely increase the level of substantive testing of transactions and balances.

Select one:

True

False