1. Which of the following is not an assurance to be provided by an effective internal control system?

1. Transactions are recorded to maintain accountability for assets.
2. Access to assets is limited to members of management.
3. Transactions are recorded to permit the preparation of reliable financial statements.
4. Management is responsible for knowledge and authorization of transactions.

2. Which of the following internal control is most likely relevant to an audit of financial statements?

1. A banks loan approval process.
2. A TV manufacturers computerized production scheduling system.
3. A furniture manufacturers controls for incidental sales of scrap materials that accounts for less than 1% of total sales.
4. An airlines automated controls that maintain flight schedules.

3. Which of the following elements is most likely to be a component of a direct reporting assurance engagement?

1. Absolute assurance
2. Auditor independence
3. Low level of assurance
4. A written independence