7.

Audit evidence concerning segregation of duties ordinarily is best obtained by

a. Performing tests of transactions that corroborate management’s financial
statement assertions
b. Observing the employees as they apply specific controls.
c. Obtaining a flowchart of activities performed by available personnel.
d. Developing audit objectives that reduce control risk.

8. Which of the following statements about preliminary assessment of control

risks is correct?
a. After obtaining an understanding of the accounting and internal control
systems, the auditor should make a preliminary assessment of control risks,
at the assertion level, for all accounts or transaction classes.
b. The preliminary assessment of control risk can be done only after completing
tests of controls.
c. The preliminary assessment of control risk for a financial assertion is normally
low, unless the auditor is able to identify weaknesses that may indicate
ineffectiveness of accounting and internal control system.
d. The auditor ordinarily assesses control risk at high level for some or all
assertions when it is not cost efficient to do tests of controls.
9. Audit evidence concerning segregation of duties ordinarily is best obtained by
a. Performing tests of transactions that corroborate management’s financial
statement assertions
b. Observing the employees as they apply specific controls.
c. Obtaining a flowchart of activities performed by available personnel.
d. Developing audit objectives that reduce control risk.

10. Which of the following statements about preliminary assessment of control

risks is correct?
a. After obtaining an understanding of the accounting and internal control
systems, the auditor should make a preliminary assessment of control risks,
at the assertion level, for all accounts or transaction classes.
b. The preliminary assessment of control risk can be done only after completing
tests of controls.
c. The preliminary assessment of control risk for a financial assertion is normally
low, unless the auditor is able to identify weaknesses that may indicate
ineffectiveness of accounting and internal control system.
d. The auditor ordinarily assesses control risk at high level for some or all
assertions when it is not cost efficient to do tests of controls.