Reference no: EM132725842

Problem 1: The relationship between the required understanding of the internal control structure and the preliminary audit strategy is that:

Select one:

Option 1: normally, greater understanding is required when the lower assessed level of control risk approach is used.
Option 2: no understanding is required in the planning stage unless tests of controls are a planned part of the strategy.
Option 3: normally, less understanding is required when the lower assessed level of control risk approach is used.
Option 4: normally, greater understanding is required when the primarily substantive approach is used.

Problem 2: A procedure the auditor would employ in identifying related party transactions is:

Select one:
Option 1: reviewing previous period working papers.
Option 2: reviewing shareholder records.
Option 3: reviewing minutes of shareholders and directors' meetings.
Option 4: all of the above.