Question

Jan 24 2019 16 of 19 prooess? O a Observe an employee perform the review O b. Detomine if the reviow was comploted in a O c Vouch the bank balance to an external 17 of 19 O a Copy prior years process activities O c Read the clien's up to date process documontation O d Resoarch the company's website 18 of 19 Which of the following statements about intornal controls is correct? O a We will likely reduce the exdent of substantive procedures when control nisk has been assessed as high O b We may perform tests of operating effectiveness of controls afer condluding that they are designed and implomented effectively O c. We may selecl smaller sample sizes for tests of operaing eflectiveness when risk of taiure has been assessod as high O d Wo will likely increase the extent of substantive audt procedures when controls are oporating effectively 19 of 19

Answer 1

16 - Answer is option c - Vouch the bank balance to an external confirmation. External confirmation is a reliable source to vouch the bank balance and to test operating effectiveness of the Management Review Control of the Bank reconciliation process.

17 - Answer is option c - Read the client's up-to-date process documentation. To update the engagement team's understanding of a client's process activities, the engagement team must read the client's up-to-date process documentation as it is the recent and reliable document available.

18 - Answer is option b - We may perform tests of operating effectiveness of controls after concluding that they are designed and implemented effectively. Once the controls are designed and implemented effectively only then auditors must perform tests of operating effectiveness. Hence, option b is correct and others are wrong.