Complete the questions below.

1. A client may occasionally prepare summary financial statements based upon an auditor's

report except when _________________________________________________________.

2. You have been assigned by the Audit Partner of your firm to suggest two audit procedures, as a starting point, for the audit of the corporation's long-term debt. These may include:

_____________________________________________________________________________

____________________________________________________________________________

3. Usually internal control over credit sales is strengthened by __________________________

___________________________________________________________________________.

4. A basic characteristic of effective control over notes receivable consists of a subdivision of

duties. One example may be ___________________________________________________.

5. To verify the account "Appropriation of Retained Earnings for Plant Expansion", an auditor

would look to the ____________________________________________________________.

6. ABC Corp. has a 10% interest in the capital stock of XYZ Corp. On January 15, 202X, the Board of Directors of XYZ Corp. declared a $1 per share cash dividend on its common stock. To verify the proper recording of this transaction compare the______________________ with the cash receipts journal.

7. & 8. Using Figure 9.4 with a risk of assessing internal control risk too low, assume that auditors expect the deviation rate in the population to be 1% and a 7% tolerable deviation rate to justify their planned assessed level of control risk related to this control. Under these assumptions, the sample size would be _____ which must contain no more than _____ control deviations.

9. Based on the question above, instead 3 deviations are found using the sample. Using figure 9.5the tolerable deviation rate would be increased to _______ percent.

10. The SEC Chair, Gary Gensler, and former MIT professor, defines cryptography as:

__________________________________________________________________________.