ABC Co. has significant information that is transmitted, processed, maintained, and accessed electronically. The auditor has concluded that it is not possible to reduce detection risk to an acceptable level by performing only substantive tests for a number of financial statement assertions. The auditor's alternative strategy is toSelect one:a.Require management to change its information system to provide appropriate evidence.b.Perform tests of controls to gather evidential matter to use in assessing control risk related to those assertions.c.Focus audit tests on other assertions for which substantive tests prove to be effective.d.Increase the acceptable audit risk.

This risk may be reduced to an acceptable level through the risk-based approach to auditing:identifying and assessing risks of material misstatement at the financial statement and assertion levels (ISA 315);designing and performing audit procedures to obtain sufficient appropriate audit evidence to draw reasonable conclusions on which to base the audit opinion (ISA 330).

Understanding the business and using this information appropriately assists the auditor in, exceptSelect one:a.Planning and performing the audit effectively and efficiently.b.Evaluating audit evidence.c.Assessing risks and identifying potential problemsd.Deciding whether to do tests of controls

The purpose of an audit of financial statements is to

The financial statements subject to audit are those of the entity, prepared and presented by external auditors of the entity with oversight from the managementSelect one:TrueFalse

When an organization seeks validation of its financial statements and IT controls for stakeholders, which type of audit is most suitable?