Refer to the following items for numbers: I. Substantive testing is to be performed at yearend; II. Client's property plant and equipment are mortgaged in relation to its long-term debt; III. Client strictly monitors compliance with attached loan covenants; IV. Receivable accounts are composed of small but voluminous accounts with regional retailers; V.Test of transactions is to be used over analytical procedures for revenue accounts; VI. Client is operating in a highly regulated industry. Which of the items above pertain(s) to risk of material misstatement?

All of these

All except I, V and VI

All except I and V

All except I, IV, V, VI

Which of the following is the most appropriate basis for setting the preliminary materiality for a holding company? Users only monitor the investment of this company to another profitable company.

Pre-tax income

Revenues

Total assets

Total equity

Which of the following is an appropriate procedure in assessing inherent risk?

Review of client's control documentations

Review of regulatory requirements specific to the client's business

Review of bank reconciliation statements

Performing predictive and confirmatory analytical procedures

Who ultimately determines an auditor's independence?

Quality Review Committee

Securities and Exchange Commission

Board of Accountancy

Auditor

Which is the hardest subject matter to provide assurance on?

Financial information

Degree of compliance with laws and regulations

Efficiency and effectiveness of internal controls

All of the following are equally hard to provide assurance on