Assessing control risk at a lower level most likely would involve:

performing more extensive substantive procedures with larger sample sizes than originally planned.

identifying specific internal controls relevant to specific assertions.

reducing inherent risk for most of the assertions relevant to significant account balances.

changing the timing of substantive procedures by omitting interim testing and performing the tests at year$-$end.

Question $2$

Question $2$

$1$ Point

A reliance strategy is used when control risk has been set at high.

True

False

Clear selection

Question $3$

Question $3$

$1$ Point

COSO$$s Internal Control $$ Integrated Framework identifies six components of an effective system of internal control.

True

False

Clear selection

Question $4$

Question $4$

$1$ Point

The independent auditor selects several transactions in each functional area and traces them through the entire system, paying special attention to evidence about whether or not the control activities are in operation. This is an example of a$($n$)$:

test of controls.

functional test.

analytical procedure.

substantive procedure.

Question $5$

Question $5$

$1$ Point

Tests of controls must be performed if control risk is set at a lower level.

True

False

Clear selection

Question $6$

Question $6$

$1$ Point

Internal controls are not designed to provide reasonable assurance that:

all embezzlement will be completely eliminated.

amounts recorded for assets are compared with the actual existing assets at reasonable intervals.

access to assets is permitted only in accordance with management$$s authorization.

transactions are executed in accordance with management$$s authorization.

Question $7$

Question $7$

$1$ Point

Which of the following most likely would not be considered an inherent limitation of the potential effectiveness of an entity's internal controls?

incompatible duties

collusion among employees

mistakes in judgment

management override

Question $8$

Question $8$

$1$ Point

When an auditor increases the planned assessed level of control risk because certain control activities were determined to be ineffective, the auditor would most likely increase the:

level of detection risk.

extent of tests of controls.

level of inherent risk.

extent of tests of details.

Question $9$

Question $9$

$1$ Point

An entity$$s internal controls are most relevant to the auditor when the policies and procedures:

relate to management$$s planning decisions.

reflect management$$s philosophy and operating style.

address management$$s operating decisions.

affect the financial statement assertions.

Question $10$

Question $10$

$1$ Point

Proper segregation of functional responsibilities to achieve effective internal control calls for separation of the functions of:

Authorization, payment, and recording.

Authorization, execution, and payment.

Authorization, recording, and custody.

Custody, execution, and reporting.