Why would the auditor assess control risk?Select one:a.Because it indicates where inherent risk may be the greatest.b.Because it determines whether sampling risk is sufficiently low.c.Because it affects the level of detection risk the auditor may accept.d.Because it includes the aspects of nonsampling risk that are controllable.

Which of the following statements concerning control risk is correct?Select one:a.When control risk is at the maximum level, an auditor is required to document the basis for that assessment.b.Control risk may be assessed sufficiently low to eliminate substantive testing for significant transaction classes.c.When assessing control risk, an auditor should not consider evidence obtained in prior audits about the operation of controls.d.Assessing control risk and obtaining an understanding of an entity's internal control may be performed concurrently.

The likelihood of assessing control risk too low is the risk that the sample selected to test controlsSelect one:a.Contains misstatements that could be material to the financial statements when aggregated with misstatements in other account balances.b.Contains proportionately more deviations from prescribed internal control policies or procedures than exist in the population.c.Does not support the tolerable misstatement for some or all of management's assertions.d.Does support the auditor's planned assessed level of control risk when the true operating effectiveness of the control does not justify such an assessment.

As a result of tests of controls, an auditor assessed control risk too low and decreased substantive testing. This assessment occurred because the true deviation rate in the population wasSelect one:a.More than the risk of assessing control risk too low, based on the auditor's sample.b.Less than the deviation rate in the auditor's sample.c.More than the deviation rate in the auditor's sample.d.Less than the risk of assessing control risk too low, based on the auditor's sample.

Which statement is incorrect about sampling risk?Select one:a.Risk of assessing control risk too low and risk of incorrect acceptance affects audit effectiveness as it would usually lead to additional work to establish that initial conclusions were incorrect.b.Sampling risk arises from the possibility that the auditor's conclusion, based on a sample may be different from the conclusion reached if the entire population were subjected to the same audit procedure.c.Risk of assessing control risk too high is the risk that the auditor will conclude, in the case of a test of control, that control risk is higher than it actually is.d.The mathematical complements of sampling risks are termed confidence levels.

If the results from tests of controls demonstrate that the internal controls are operating effectively, how will the auditor assess the levels of control risk and detection risk? Question 11Answer a. The level of control risk will be assessed as low. To achieve an acceptable level of audit risk the auditor can accept a lower level of detection risk. b. The level of control risk will be assessed as higher. To achieve an acceptable level of audit risk the auditor can accept a lower level of detection risk. c. The auditor determines that the internal controls are operating effectively, the level of control risk will be assessed as low. To achieve an acceptable level of audit risk the auditor can accept a higher level of detection risk. d. The level of control risk will be assessed as high. To achieve an acceptable level of audit risk the auditor can accept a higher level of detection risk.