course material

1. During the planning stage of an audit, the auditor initially
ASSIGNMENTThe following are general questions about assessing control risk, testing
controls, and reporting on internal controls. Choose the best response.a. During the
planning stage of an audit, the auditor initially assessed both inherent risk and control risk
at a high level. Further testing of the client’s internal controls led the auditor to reduce the
assessment of control risk. Which of the following will most likely occur as a result?(1) The
auditor may reduce the assessment of inherent risk to match the control risk,since they
were assessed at the same level during the initial planning.(2) The auditor may decrease the
allowed level of detection risk.(3) The auditor may rely solely on analytical procedures,
with no substantive procedures performed.(4) The auditor may reduce the amount of
substantive procedures performed.b. When assessing control risk, an auditor is required to
document the auditor’s:Understanding of the Entity’s Basis for the Auditor’sControl
Environment Risk Assessment(1) Yes(2) No(3) Yes(4) NoNoYesYesNoc. Jefferson, CPA, has
identified five significant deficiencies in internal control during the audit of Portico
Industries, a nonpublic company. Two of these conditions are considered to be material
weaknesses. Which best describes Jefferson’s communication requirements?(1)
Communicate the two material weaknesses to Portico’s management and those charged
with governance, but not the three significant deficiencies that are not material
weaknesses.(2) Communicate all five significant deficiencies to Portico’s management and
thosecharged with governance, distinguishing between material weaknesses and significant
deficiencies.(3) Communicate all five significant deficiencies to Portico’s management and
those charged with governance, but only require a management response with respect to
the two material weaknesses.(4) Communicate all five significant deficiencies to Portico’s
management and those charged with governance, without distinction among the
deficiencies