TRUE-FALSE QUESTIONS

1. The primary preliminary analytical procedure for stockholders' equity accounts is a comparison of current year account balances with prior-year account balances, after considering the auditor's expectations.

2. Trend analyses would not typically be used as preliminary analytical procedures related to debt obligations.

3. When responding to identified risks of material misstatements associated with stockholders' equity accounts, the auditor often decides to rely heavily on tests of controls.

4. When testing debt obligations, the auditor typically uses a substantive audit approach.

5. When auditing debt obligations, the auditor may test controls at the year end for the audit opinion on internal controls, but choose not test controls for the financial statement audit.

6. When auditing stockholders' equity transactions, the auditor may test controls at the year-end for the audit opinion on internal controls, but choose not test controls for the financial statement audit.

7. Confirmations can be used as a substantive procedure designed to obtain evidence on the completeness of debt obligations.

8. If there is a heightened risk of fraud related to the completeness of debt obligations, the auditor may choose to search public records to identify debt obligations.