Question 1

What proportion of all fraud is detected by internal auditors?

Accepted Answer

A)  a large proportion 
B)  a small proportion 
C)  none 
D)  All recorded frauds have been detected by external auditors. 
A)  a large proportion 
B)  a small proportion 
C)  none 
D)  All recorded frauds have been detected by external auditors. A

Question 2

Many organisations have a 'whistle-blowing' process for employees to report actual or suspected wrongdoing.

Accepted Answer

A) True 
 B)False  True

Question 3

Which of the following is an example of a type of revenue manipulation?

Accepted Answer

A)  premature revenue recognition 
B)  manipulation of adjustments to revenues 
C)  fictitious revenue 
D)  all of the above 
A)  premature revenue recognition 
B)  manipulation of adjustments to revenues 
C)  fictitious revenue 
D)  all of the above D

Question 4

What are the three actions management should take to prevent, deter, and detect fraud?

Accepted Answer

Management should take these three actio

Question 5

Although most cases of fraudulent financial reporting involve overstatement of assets and income or omission of liabilities and expenses in an attempt to overstate income, it is important to note that companies often deliberately understate income.Describe why an entity might take this course of action and how it would go about achieving its aim.

Accepted Answer

For privately held companies, this may b

Question 6

Which of the following accounts is most susceptible to manipulation and theft?

Accepted Answer

A)  insurance expense 
B)  long-term loans 
C)  cash accounts 
D)  share capital 
A)  insurance expense 
B)  long-term loans 
C)  cash accounts 
D)  share capital

Question 7

The risk of fraudulent financial reporting is greater for companies:

Accepted Answer

A)  where there is an ineffective audit committee. 
B)  where greater dispersion of inventories are involved. 
C)  where significant estimates are involved. 
D)  all of the above 
A)  where there is an ineffective audit committee. 
B)  where greater dispersion of inventories are involved. 
C)  where significant estimates are involved. 
D)  all of the above

Question 8

Employees can hide the theft of cash receipts by either failing to record a sale or adjusting customer accounts to hide the earlier theft of cash receipts.Describe both of these methods and how they might be performed.

Accepted Answer

One of the most difficult frauds to dete

Question 9

The audit team should conduct discussions to share insights from more experienced audit team members and to 'brainstorm' ideas that should address which of the following?

Accepted Answer

A)  how assets of the entity could be misappropriated 
B)  how management could perpetrate and conceal fraudulent financial reporting 
C)  how the auditor might respond to the susceptibility of material misstatements due to fraud 
D)  all of the above 
A)  how assets of the entity could be misappropriated 
B)  how management could perpetrate and conceal fraudulent financial reporting 
C)  how the auditor might respond to the susceptibility of material misstatements due to fraud 
D)  all of the above

Question 10

What is an example of a condition that may be identified during field work that changes or supports a judgement about the initial assessment of fraud risks?

Accepted Answer

A)  a government announcement of an interest rate rise 
B)  a wage rise granted to all employees during the audit 
C)  conflicting or missing evidential matters 
D)  development of a new product line 
A)  a government announcement of an interest rate rise 
B)  a wage rise granted to all employees during the audit 
C)  conflicting or missing evidential matters 
D)  development of a new product line

Question 11

Whenever employees have custody or even temporary access to assets and maintain the accounting records for those assets, the potential for theft exists.

Accepted Answer

A) True 
 B)False

Question 12

Which one of the following is NOT typically a type of audit evidence the auditor would use in assessing fraud risk?

Accepted Answer

A)  documentation 
B)  analytical procedures 
C)  inquiry 
D)  observation 
A)  documentation 
B)  analytical procedures 
C)  inquiry 
D)  observation

Question 13

Which option below best explains the concept of premature revenue recognition?

Accepted Answer

A)  adjusting sales returns to increase sales 
B)  sales from the next period are recorded in the current period 
C)  sales from the previous period are recorded in the current period 
D)  cut-off errors 
A)  adjusting sales returns to increase sales 
B)  sales from the next period are recorded in the current period 
C)  sales from the previous period are recorded in the current period 
D)  cut-off errors

Question 14

The key contents of an effective code of conduct in a company should include comments on:

Accepted Answer

A)  privacy and confidentiality. 
B)  conflicts of interest. 
C)  general employee conduct. 
D)  all of the above 
A)  privacy and confidentiality. 
B)  conflicts of interest. 
C)  general employee conduct. 
D)  all of the above

Question 15

Discuss the three conditions commonly associated with fraud arising from fraudulent financial reporting and misappropriations of assets.

Accepted Answer

The three conditions commonly associated

Question 16

What are the sources of information auditors should use when assessing fraud risk?

Accepted Answer

Information used to assess fraud risk is

Question 17

Fictitious transactions usually have:

Accepted Answer

A)  the same level of documentary evidence as legitimate transactions. 
B)  a lower level of documentary evidence than legitimate transactions. 
C)  a higher level of documentary evidence than legitimate transactions. 
D)  no chance of being detected by comparing the level of documentary evidence to those of legitimate transactions. 
A)  the same level of documentary evidence as legitimate transactions. 
B)  a lower level of documentary evidence than legitimate transactions. 
C)  a higher level of documentary evidence than legitimate transactions. 
D)  no chance of being detected by comparing the level of documentary evidence to those of legitimate transactions.

Question 18

Which of the following factors is the most significant contributor to fraud risk?

Accepted Answer

A)  poor hiring practices 
B)  collusion between employees and third parties 
C)  the industry in which the entity operates 
D)  overriding of internal controls 
A)  poor hiring practices 
B)  collusion between employees and third parties 
C)  the industry in which the entity operates 
D)  overriding of internal controls

Question 19

Most cases of fraudulent financial reporting involve:

Accepted Answer

A)  overstatement of assets. 
B)  omission of expenses. 
C)  omission of liabilities. 
D)  all of the above 
A)  overstatement of assets. 
B)  omission of expenses. 
C)  omission of liabilities. 
D)  all of the above

Question 20

Fraud that involves theft of an entity's assets is called:

Accepted Answer

A)  asset stripping. 
B)  management fraud. 
C)  employee fraud. 
D)  misappropriation of assets. 
A)  asset stripping. 
B)  management fraud. 
C)  employee fraud. 
D)  misappropriation of assets.

What proportion of all fraud is detected by internal auditors?

Many organisations have a 'whistle-blowing' process for employees to report actual or suspected wrongdoing.

Which of the following is an example of a type of revenue manipulation?

What are the three actions management should take to prevent, deter, and detect fraud?

Which of the following accounts is most susceptible to manipulation and theft?

The risk of fraudulent financial reporting is greater for companies:

Employees can hide the theft of cash receipts by either failing to record a sale or adjusting customer accounts to hide the earlier theft of cash receipts.Describe both of these methods and how they might be performed.

The audit team should conduct discussions to share insights from more experienced audit team members and to 'brainstorm' ideas that should address which of the following?

What is an example of a condition that may be identified during field work that changes or supports a judgement about the initial assessment of fraud risks?

Whenever employees have custody or even temporary access to assets and maintain the accounting records for those assets, the potential for theft exists.

Which one of the following is NOT typically a type of audit evidence the auditor would use in assessing fraud risk?

Which option below best explains the concept of premature revenue recognition?

The key contents of an effective code of conduct in a company should include comments on:

Discuss the three conditions commonly associated with fraud arising from fraudulent financial reporting and misappropriations of assets.

What are the sources of information auditors should use when assessing fraud risk?

Fictitious transactions usually have:

Which of the following factors is the most significant contributor to fraud risk?

Most cases of fraudulent financial reporting involve:

Fraud that involves theft of an entity's assets is called:

Demand for audit and assurance services

Auditors’ legal environment

Audit quality and ethics

Audit responsibilities and objectives

Audit evidence

Audit planning and documentation

Materiality and risk

Internal control and control risk

The impact of information technology on the audit process

Overall audit plan and audit program

Audit of the sales and collection cycle: Tests of controls and substantive tests of transactions

Completing tests in the sales and collection cycle: Accounts receivable

Audit sampling

Audit of transaction cycles and financial statement balances I

Audit of transaction cycles and financial statement balances II

Completing the audit

Audit reporting

Other auditing and assurance engagements

Filters

Exam 9: Fraud auditing

What proportion of all fraud is detected by internal auditors?

Many organisations have a 'whistle-blowing' process for employees to report actual or suspected wrongdoing.

Which of the following is an example of a type of revenue manipulation?

What are the three actions management should take to prevent, deter, and detect fraud?

Which of the following accounts is most susceptible to manipulation and theft?

The risk of fraudulent financial reporting is greater for companies:

Employees can hide the theft of cash receipts by either failing to record a sale or adjusting customer accounts to hide the earlier theft of cash receipts.Describe both of these methods and how they might be performed.

The audit team should conduct discussions to share insights from more experienced audit team members and to 'brainstorm' ideas that should address which of the following?

What is an example of a condition that may be identified during field work that changes or supports a judgement about the initial assessment of fraud risks?

Whenever employees have custody or even temporary access to assets and maintain the accounting records for those assets, the potential for theft exists.

Which one of the following is NOT typically a type of audit evidence the auditor would use in assessing fraud risk?

Which option below best explains the concept of premature revenue recognition?

The key contents of an effective code of conduct in a company should include comments on:

Discuss the three conditions commonly associated with fraud arising from fraudulent financial reporting and misappropriations of assets.

What are the sources of information auditors should use when assessing fraud risk?

Fictitious transactions usually have:

Which of the following factors is the most significant contributor to fraud risk?

Most cases of fraudulent financial reporting involve:

Fraud that involves theft of an entity's assets is called:

Demand for audit and assurance services

Auditors’ legal environment

Audit quality and ethics

Audit responsibilities and objectives

Audit evidence

Audit planning and documentation

Materiality and risk

Internal control and control risk

The impact of information technology on the audit process

Overall audit plan and audit program

Audit of the sales and collection cycle: Tests of controls and substantive tests of transactions

Completing tests in the sales and collection cycle: Accounts receivable

Audit sampling

Audit of transaction cycles and financial statement balances I

Audit of transaction cycles and financial statement balances II

Completing the audit

Audit reporting

Other auditing and assurance engagements

Filters