Question 1

The objective of SAS 99 is to seamlessly blend the auditor's consideration of fraud into all phases of the audit process.

Accepted Answer

A) True 
 B)False

Question 2

Internal control systems are recommended but not required of firms subject to the Sarbanes-Oxley Act.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following best describes lapping?

Accepted Answer

A)  applying cash receipts to a different customer's account in an attempt to conceal previous thefts of funds 
B)  inflating bank balances by transferring money among different bank accounts 
C)  expensing an asset that has been stolen 
D)  creating a false transaction 
A)  applying cash receipts to a different customer's account in an attempt to conceal previous thefts of funds 
B)  inflating bank balances by transferring money among different bank accounts 
C)  expensing an asset that has been stolen 
D)  creating a false transaction

Question 4

The office manager forgot to record in the accounting records the daily bank deposit.Which control procedure would most likely prevent or detect this error?

Accepted Answer

A)  segregation of duties 
B)  independent verification 
C)  accounting records 
D)  supervision 
A)  segregation of duties 
B)  independent verification 
C)  accounting records 
D)  supervision

Question 5

Which of the following is not an example of independent verification?

Accepted Answer

A)  comparing fixed assets on hand to the accounting records 
B)  performing a bank reconciliation 
C)  comparing the accounts payable subsidiary ledger to the control account 
D)  permitting authorized users only to access the accounting system 
A)  comparing fixed assets on hand to the accounting records 
B)  performing a bank reconciliation 
C)  comparing the accounts payable subsidiary ledger to the control account 
D)  permitting authorized users only to access the accounting system

Question 6

Use the internal control procedures listed below to complete the statements.
  
-A clerk reorders 250 items when the inventory falls below 25 items.This is an example of __________________________.

Accepted Answer

general au

Question 7

What are the six broad classes of physical control activities defined by SAS 78?

Accepted Answer

Transaction authorization,segr

Question 8

Give two examples of employee fraud and explain how the theft might occur.

Accepted Answer

Charges to expense accounts: Cash could

Question 9

Situational pressure includes personal or job related stresses that could coerce an individual to act dishonestly.

Accepted Answer

A) True 
 B)False

Question 10

Explain the problems associated with lack of director independence

Accepted Answer

Many boards of directors are comprised o

Question 11

Which of the following is a preventive control?

Accepted Answer

A)  credit check before approving a sale on account 
B)  bank reconciliation 
C)  physical inventory count 
D)  comparing the accounts receivable subsidiary ledger to the control account 
A)  credit check before approving a sale on account 
B)  bank reconciliation 
C)  physical inventory count 
D)  comparing the accounts receivable subsidiary ledger to the control account

Question 12

Which of the following suggests a weakness in the internal control environment?

Accepted Answer

A)  the firm has an up-to-date organizational chart 
B)  monthly reports comparing actual performance to budget are distributed to managers 
C)  performance evaluations are prepared every three years 
D)  the audit committee meets quarterly with the external auditors 
A)  the firm has an up-to-date organizational chart 
B)  monthly reports comparing actual performance to budget are distributed to managers 
C)  performance evaluations are prepared every three years 
D)  the audit committee meets quarterly with the external auditors

Question 13

Skimming involves

Accepted Answer

A)  stealing cash from an organization before it is recorded 
B)  Stealing cash from an organization after it has been recorded 
C)  manufacturing false purchase orders, receiving reports, and invoices 
D)  A clerk pays a vendor twice for the same products and cashes the reimbursement check issued by the vendor. 
A)  stealing cash from an organization before it is recorded 
B)  Stealing cash from an organization after it has been recorded 
C)  manufacturing false purchase orders, receiving reports, and invoices 
D)  A clerk pays a vendor twice for the same products and cashes the reimbursement check issued by the vendor.

Question 14

Management fraud is regarded as more serious than employee fraud.Three special characteristics have been discussed for management fraud.What are they? Explain.

Accepted Answer

Management fraud is more insidious than

Question 15

The importance to the accounting profession of the Sarbanes-Oxley Act is that

Accepted Answer

A)  bribery will be eliminated 
B)  management will not override the company's internal controls 
C)  management are required to certify their internal control system 
D)  firms will not be exposed to lawsuits 
A)  bribery will be eliminated 
B)  management will not override the company's internal controls 
C)  management are required to certify their internal control system 
D)  firms will not be exposed to lawsuits

Question 16

Explain why collusion between employees and management in the commission of a fraud is difficult to both prevent and detect.

Accepted Answer

Collusion among employees in the commiss

Question 17

When certain customers made cash payments to reduce their accounts receivable,the bookkeeper embezzled the cash and wrote off the accounts as uncollectible.Which control procedure would most likely prevent this irregularity?

Accepted Answer

A)  segregation of duties 
B)  accounting records 
C)  accounting system 
D)  access controls 
A)  segregation of duties 
B)  accounting records 
C)  accounting system 
D)  access controls

Question 18

Employees should be made aware of the firm's commitment to ethics.

Accepted Answer

A) True 
 B)False

Question 19

The Sarbanes-Oxley Act requires the audit committee to hire and oversee the external auditors.

Accepted Answer

A) True 
 B)False

Question 20

The Sarbanes-Oxley Act requires only that a firm keep good records.

Accepted Answer

A) True 
 B)False

The objective of SAS 99 is to seamlessly blend the auditor's consideration of fraud into all phases of the audit process.

Internal control systems are recommended but not required of firms subject to the Sarbanes-Oxley Act.

Which of the following best describes lapping?

The office manager forgot to record in the accounting records the daily bank deposit.Which control procedure would most likely prevent or detect this error?

Which of the following is not an example of independent verification?

Use the internal control procedures listed below to complete the statements. -A clerk reorders 250 items when the inventory falls below 25 items.This is an example of __________________________.

What are the six broad classes of physical control activities defined by SAS 78?

Give two examples of employee fraud and explain how the theft might occur.

Situational pressure includes personal or job related stresses that could coerce an individual to act dishonestly.

Explain the problems associated with lack of director independence

Which of the following is a preventive control?

Which of the following suggests a weakness in the internal control environment?

Skimming involves

Management fraud is regarded as more serious than employee fraud.Three special characteristics have been discussed for management fraud.What are they? Explain.

The importance to the accounting profession of the Sarbanes-Oxley Act is that

Explain why collusion between employees and management in the commission of a fraud is difficult to both prevent and detect.

When certain customers made cash payments to reduce their accounts receivable,the bookkeeper embezzled the cash and wrote off the accounts as uncollectible.Which control procedure would most likely prevent this irregularity?

Employees should be made aware of the firm's commitment to ethics.

The Sarbanes-Oxley Act requires the audit committee to hire and oversee the external auditors.

The Sarbanes-Oxley Act requires only that a firm keep good records.

The Information System: An Accountant’s Perspective

Introduction to Transaction Processing

The Revenue Cycle

The Expenditure Cycle Part I: Purchases and Cash Disbursements Procedures

The Expenditure Cycle Part II: Payroll Processing and Fixed Asset Procedures

The Conversion Cycle

General Ledger, Financial Reporting, and Management Reporting Systems

Database Management Systems

The REA Approach to Business Process Modeling

Enterprise Resource Planning Systems

Electronic Commerce Systems

Managing the Systems Development Life Cycle

Construct, Deliver, and Maintain Systems Projects

IT Controls : Sarbanes-Oxley and IT Governance

IT Controls : Security and Access

IT Controls : Systems Development Program Changes and Application Controls

Filters

Exam 3: Ethics, Fraud, and Internal Control

The objective of SAS 99 is to seamlessly blend the auditor's consideration of fraud into all phases of the audit process.

Internal control systems are recommended but not required of firms subject to the Sarbanes-Oxley Act.

Which of the following best describes lapping?

The office manager forgot to record in the accounting records the daily bank deposit.Which control procedure would most likely prevent or detect this error?

Which of the following is not an example of independent verification?

Use the internal control procedures listed below to complete the statements. -A clerk reorders 250 items when the inventory falls below 25 items.This is an example of __________________________.

What are the six broad classes of physical control activities defined by SAS 78?

Give two examples of employee fraud and explain how the theft might occur.

Situational pressure includes personal or job related stresses that could coerce an individual to act dishonestly.

Explain the problems associated with lack of director independence

Which of the following is a preventive control?

Which of the following suggests a weakness in the internal control environment?

Skimming involves

Management fraud is regarded as more serious than employee fraud.Three special characteristics have been discussed for management fraud.What are they? Explain.

The importance to the accounting profession of the Sarbanes-Oxley Act is that

Explain why collusion between employees and management in the commission of a fraud is difficult to both prevent and detect.

When certain customers made cash payments to reduce their accounts receivable,the bookkeeper embezzled the cash and wrote off the accounts as uncollectible.Which control procedure would most likely prevent this irregularity?

Employees should be made aware of the firm's commitment to ethics.

The Sarbanes-Oxley Act requires the audit committee to hire and oversee the external auditors.

The Sarbanes-Oxley Act requires only that a firm keep good records.

The Information System: An Accountant’s Perspective

Introduction to Transaction Processing

The Revenue Cycle

The Expenditure Cycle Part I: Purchases and Cash Disbursements Procedures

The Expenditure Cycle Part II: Payroll Processing and Fixed Asset Procedures

The Conversion Cycle

General Ledger, Financial Reporting, and Management Reporting Systems

Database Management Systems

The REA Approach to Business Process Modeling

Enterprise Resource Planning Systems

Electronic Commerce Systems

Managing the Systems Development Life Cycle

Construct, Deliver, and Maintain Systems Projects

IT Controls : Sarbanes-Oxley and IT Governance

IT Controls : Security and Access

IT Controls : Systems Development Program Changes and Application Controls

Filters