11. After obtaining an understanding of the internal control structure and asses
ID: 414483 • Letter: 1
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11. After obtaining an understanding of the internal control structure and assessing control auditor decided not to perform tests of controls for purposes of the audit. The A. The available evidential matter obtained through tests of controls would not supp control risk. B. A reduction in the assessed level of control risk is justified for certain financial statement sserions. risk of an enity, suditor most ort an incecased level of C. It would be inefficient to perform tests of controls that would result in a reduction in planned substantive tests. D·The assessed level of inherent risk exceeded the assessed level of control risk 12. In A. Receive and deposit checks, and also approve write-offs of customer accounts. B. Approve vouchers for payment, and also sign checks. C. Reconcile the bank statements, and also receive and deposit cash. D. Sign checks, and also cancel supporting documents. a properly designed internal control system, the same employee may be permitted to 3. A field test is a Test to ensure that a numerical value in a field does not exceed some predetermined value. A check to ensure that the value in a field falls within an allowable range of values. A check to ensure that the data in a field have the proper arithmetic sign. or alphabetic characters. id to cnsure that it contains either all numeric or alpbabetic charactersExplanation / Answer
Answer 11: Option C: It would be efficient to perform tests of controls that would result in a reduction in planned substantive tests.
After obtaining an understanding of internal controls and assessing control risk on the audit of a non-public company, an auditor decided to perform tests of controls. The auditor most likely decided that it would be efficient to perform tests of controls that would result in a reduction in planned substantive tests.
Answer 12: Option D: Sign checks and also cancel supporting documents.
In a properly designed internal control system, the same employee may be permitted to mal sign checks and also cancel supporting documents. So no one can make fraud with his documents.
Answer 13: Option D: Check on a field to ensure that it contains either all numeric or alphabetic characters.
A field test is a test where an executive go to the physical location for checking and ensure that it contains either all numeric or alphabetic characters.
Answer 14: Option B: Concluding that controls are ineffective.
Assessing control risk below maximum involves concluding that controls are ineffective.
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