The auditor would not test controls for an assertion when ___ misstatement exceeds ____ misstatement.

Analytical procedures are

A. Never required.

B. Required for planning and in the review stage of the audit.

C. Required for planning, substantive testing, and in the review stage of the audit .

D. Required during planning only.

The concept of reasonable assurance in the context of an entity's internal controls recognizes that

A. Well designed internal controls guarantee that material misstatements cannot occur.

B. Well designed internal controls preventall fraud from occurring.

C. Auditors may fail to detect material misstatements.

D. Thepotential benefits of a control should outweigh the cost of implementing the control

The risk assessment component of internal control refers to

A. The auditor's assessment of control risk.

B. The entity's assessment of the potential for material misstatements.

C. The entity's identification and analysis of risks relevant to achievement of its objectives.

D.The auditor's assessment of client risk.

Which of the following is not an element of management's assessment process for the effectiveness of internal control?

A. Obtaining the auditor's assessment of the internal control effectiveness.

B. Determining the locations and business units to include in the evaluation.

C. Evaluating the likelihood that failure of a control could result in a misstatement.

D.Determining significant deficiencies and material weaknesses in controls.

Calculate the projected misstatement in a population using difference projection.

Tolerable Misstatement $20,000

Materiality $50,000

Sample size $ 46,654

Population size $ 534,115

Sample misstatement $ 379

Sample item number 1,147

Population item number 19,085

_________

Calculate the projected misstatement in a population using ratio projection.

Tolerable Misstatement $20,000

Materiality $50,000

Sample size $ 6,854

Population size $ 540,695

Sample misstatement $ 197

Sample item number 1,235

Population item number 81,030

__________

As part of gaining an initial understanding of internal control, an auditor is required to doall of the following except: A. Identify the types of potential misstatements that can occur.

B. Design test of controls and substantive procedures.

C. Obtain knowledge about the operating effectiveness of the internal control.

D. Consider factors that affect the risk of material misstatement.

The risk of incorrect _____ relates to the effectiveness of an audit, while the risk of incorrect _____ relates to the

_____ of an audit.

Which of the following elements ultimately determines the amount of audit work that is necessary in the circumstances to afford a reasonable basis for an opinion?

A. Control risk

B. Materiality

C. Inherent risk

D. Auditor judgment