Exam 6: Employee Fraud and the Audit of Cash 227

To gather evidence regarding the bank's balance in a bank reconciliation, an auditor would examine all of the following except the:

When auditing financial statements and finding indications of a possible misappropriation of assets, independent auditors should:

Which of the following should be performed by the persons opening the mail and recording payments?

A company employs three accounts payable clerks and one treasurer. Their responsibilities are as follows: Employee Reviews Clerk 1 Review vendor invoices for proper signature approval. Clerk 2 Enters vendor invoice into the accounting system and verifies payment terms. Clerk 3 Posts entered vendor invoices to accounts payable ledger for payment and mail checks. Treasurer Review the vendor invoices and signs each check. Which of the following would indicate a weakness in the company's internal controls?

Which of the following is not considered one of the three factors increasing the probability of fraud?

At the end of each business day, Safe Company sends its bank a listing of all checks written during the day including the check number, payee, and amount. When a check is sent to the bank for payment the bank compares the payee and the amount with the listing provided by Safe Company. This system is called:

When an employee embezzles company funds from an electric utility company for the purpose of paying expenses of an anti-nuclear protest organization, the fraudster's motive is said to be:

List, and briefly describe, the three factors that increase the probability of fraud.

An auditor is considering whether the omission of the confirmation of investments impairs the auditor's ability to support a previously expressed unmodified opinion. The auditor need not perform this omitted procedure if:

Each of the following is a type of known misstatement, except:

When counting cash on hand the auditor must exercise simultaneous control over all cash and other negotiable assets to prevent:

Which of the following is ordinarily considered an "extended procedure" during the independent audit of financial statements?

An audit plan of substantive procedures for cash would not include:

An entity with a large volume of customer remittances by mail could most likely reduce the risk of employee misappropriation of cash by using:

An auditor would least likely initiate a discussion with a client's audit committee concerning:

In the audit of cash the auditor obtains a bank cutoff statement primarily to:

Narbona, CPA, is reviewing controls over cash received through a bank night depository. Which controls would she find most important?

Micro Chip Corporation (MCC) has a special PO Box for customer payments. Jane is responsible for:going to the post office every day,emptying the post office box,opening the mail,making a prelist,sending the remittance advices to accounts receivable, andsending the checks to the cashier's office.Jane has opening a business account at her bank for Master Cleaning Company (MCC). Several of Micro Chips checks are made out with only the initials MCC. Jane selects certain checks made out only with the initials MCC and deposits them in her business account. She would destroy the remittance advice.Name two controls that would prevent or detect this fraud.Name two audit procedures that might detect this fraud.

Your client is in the process of acquiring another company. You have been requested to verify that cash for the company being acquired is properly stated. The audit technique that will yield the most persuasive evidence is: