The following questions deal with assessing control risk in a financial statement audit. Choose the best response. 

a. On the basis of audit evidence gathered and evaluated, an auditor decides to increase assessed control risk from that originally planned. To achieve an audit risk level (AcAR) that is substantially the same as the planned audit risk level (AAR), the auditor will 

(1) increase inherent risk. 

(2) increase materiality levels. 

(3) decrease substantive testing. 

(4) decrease planned detection risk. 

b. An auditor uses assessed control risk to 

(1) evaluate the effectiveness of the entity’s internal controls. 

(2) identify transactions and account balances where inherent risk is at the maximum.

(3) indicate whether materiality thresholds for planning and evaluation purposes are sufficiently high. (4) determine the acceptable level of detection risk for financial statement assertions. 

c. The ultimate purpose of assessing control risk is to contribute to the auditor’s evaluation of the 

(1) factors that raise doubts about the auditability of the financial statements. 

(2) operating effectiveness of internal control policies and procedures. 

(3) risk that material misstatements exist in the financial statements. (4) possibility that the nature and extent of substantive tests may be reduced.