An auditor uses an attribute sampling plan to determine whether large expenditures are being properly approved.

1. An auditor uses an attribute sampling plan to determine whether large expenditures are being properly approved. The auditor is willing to accept a 2% risk of assessing control risk too low, and has a tolerable rate of 5%. A sample of 100 invoices is selected, and only one is found to be lacking appropriate approval. One invoice selected by the auditor cannot be located. Which statement is true?(Points: 10)Since the sample deviation rate is less than the tolerable rate, the auditor should rely on this control.There is not enough information given to determine whether the auditor should rely on this control.Since the auditor has a tolerable rate of 5%, he or she can be 95% certain that he or she will make a correct decision.The invoice selected by the auditor that cannot be located is ignored in the calculation of the sample deviation rate.2. Stratified sampling would best be used in a situation where: (Points: 10)There is a lot of variation among items in the population.The population has an abnormally small standard deviation.The population consists of very few items.The population is unusually homogeneous.3. Which of the following is not true about significant deficiencies in internal control? (Points: 10)All material weaknesses in internal control are also significant deficiencies.The auditor is required to search for significant deficiencies in internal control.The auditor is required to communicate to management and those charged with governance all significant deficiencies in internal control that he or she observes during the audit.The auditor should not indicate to management that no significant deficiencies in internal control were noted during the audit.4. An auditor has been hired to report on an nonissuer's internal control over financial reporting. Which of the following best describes a reporting option in this scenario? (Points: 10)If management fails to provide a written representation letter acknowledging its responsibility for the effectiveness of internal control, the auditor will generally issue an unqualified opinion with additional explanatory language.When a material weakness exists, the auditor should issue an adverse opinion.When a significant deficiency exists, the auditor may issue either a qualified or adverse opinion.If management fails to provide a written representation letter acknowledging its responsibility for the effectiveness of internal control, the auditor may issue either a qualified opinion or an adverse opinion.5. Which is true regarding PCAOB standards surrounding internal control? (Points: 10)All auditors must follow PCAOB standards surrounding internal control.PCAOB standards surrounding internal control apply only to audits of issuers.PCAOB standards surrounding internal control apply only to audits of nonissuers.The PCAOB has not issued standards surrounding internal control.6. An auditor must inform those charged with governance about:I. Disagreements with management.II. Disagreements among the audit staff.III. Difficulties encountered in performing the audit.(Points: 10)I, II, and III.I and II only.I and III only.III only.7. Which of the following is true about the auditor's communication with those charged with governance?(Points: 10)The communication should be two-way: those charged with governance should also communicate relevant matters to the auditor.The auditor should not discuss matters with management prior to communicating those matters to those charged with governance.The auditor should not discuss the planned scope and timing of the audit with those charged with governance, since it will compromise the effectiveness of audit procedures by making them too predictable.Written communications to those charged with governance are appropriate for general use.8. Management representations should be obtained about all of the following, except: (Points: 10)Uncorrected misstatements identified by the auditor.The absence of unrecorded transactions.Management's consultation with other accountants.Instances of immaterial fraud involving employees who have significant roles in internal control.9. Government Auditing Standards published by the United States Government Accountability Office define standards associated with the following types of engagements: (Points: 10)Financial audits, attest engagements, and performance audits.Financial audits, single audits, and program specific audits.Financial audits, attest engagements, and program-specific audits.Audits, reviews, and compilations.10. An auditor conducting a compliance audit will design and perform additional audit procedures in response to the assessed risk of material noncompliance. These procedures will include tests of controls if:(Points: 10)The auditor has determined a deficiency in the design of internal control over compliance.The auditor's expectation of the operating effectiveness of controls over compliance is otherwise unknown.Tests of controls are required by the governmental audit requirement.The auditor has been engaged to perform an organization-wide audit.