Question 1

Which of the following is the most successful method of uncovering fraud?

Accepted Answer

A)  internal controls 
B)  accident 
C)  third-party investigation 
D)  notification by supplier 
A)  internal controls 
B)  accident 
C)  third-party investigation 
D)  notification by supplier

Question 2

Which of the following is NOT a method of the effective audit evidence gathering technique of inquiry?

Accepted Answer

A)  assessment inquiry 
B)  documentary evidence 
C)  interrogative inquiry 
D)  informational inquiry 
A)  assessment inquiry 
B)  documentary evidence 
C)  interrogative inquiry 
D)  informational inquiry

Question 3

The primary responsibility of the audit committee is to:

Accepted Answer

A)  oversee management's fraud risk assessment process. 
B)  communicate with the auditor. 
C)  oversee the organisation's financial reporting and internal control. 
D)  all of the above 
A)  oversee management's fraud risk assessment process. 
B)  communicate with the auditor. 
C)  oversee the organisation's financial reporting and internal control. 
D)  all of the above

Question 4

Continuous evaluation of employee compliance with the company's values reduces the likelihood of fraud.

Accepted Answer

A) True 
 B)False

Question 5

Research shows that the most effective way to deter fraud is to:

Accepted Answer

A)  create an environment of reinforcing acceptable behaviours. 
B)  give managers strict procedures to follow. 
C)  give employees little chance of promotion. 
D)  all of the above 
A)  create an environment of reinforcing acceptable behaviours. 
B)  give managers strict procedures to follow. 
C)  give employees little chance of promotion. 
D)  all of the above

Question 6

Fraud is more prevalent in smaller businesses because:

Accepted Answer

A)  it is more difficult to maintain adequate segregation of duties. 
B)  employees may be less trustworthy. 
C)  cash is readily accessible. 
D)  all of the above 
A)  it is more difficult to maintain adequate segregation of duties. 
B)  employees may be less trustworthy. 
C)  cash is readily accessible. 
D)  all of the above

Question 7

Describe 'premature revenue recognition' and give an example.

Accepted Answer

Companies often accelerate the timing of

Question 8

Explain how revenue accounts are especially susceptible to fraud.

Accepted Answer

Revenue accounts are especially suscepti

Question 9

A focus on fraud detection is often more effective and less costly than deterrence.

Accepted Answer

A) True 
 B)False

Question 10

Discuss the role and responsibilities of the audit committee.

Accepted Answer

The primary responsibility of the audit

Question 11

The primary responsibility to oversee the organisation's financial reporting and internal control processes lies with:

Accepted Answer

A)  ASIC. 
B)  the audit committee. 
C)  external auditors. 
D)  internal auditors. 
A)  ASIC. 
B)  the audit committee. 
C)  external auditors. 
D)  internal auditors.

Question 12

How does fictitious revenue effect gross margin?

Accepted Answer

A)  It has no effect. 
B)  It cannot be detected by analysing gross margin. 
C)  It understates gross margin. 
D)  It overstates gross margin. 
A)  It has no effect. 
B)  It cannot be detected by analysing gross margin. 
C)  It understates gross margin. 
D)  It overstates gross margin.

Question 13

When risks of material misstatements due to fraud are identified, how should auditors adjust their audit approach?

Accepted Answer

Auditor responses to fraud risk include

Question 14

To reduce the potential for theft, fixed assets should be:

Accepted Answer

A)  engraved or otherwise permanently labelled. 
B)  periodically inventoried. 
C)  physically protected whenever possible. 
D)  all of the above 
A)  engraved or otherwise permanently labelled. 
B)  periodically inventoried. 
C)  physically protected whenever possible. 
D)  all of the above

Question 15

Which of the following is a common method of fraudulent financial reporting?

Accepted Answer

A)  misappropriation of inventory 
B)  management's practice of making overly unrealistic forecasts to analysts 
C)  theft of assets 
D)  all of the above 
A)  misappropriation of inventory 
B)  management's practice of making overly unrealistic forecasts to analysts 
C)  theft of assets 
D)  all of the above

Question 16

Auditor responses to fraud risk include which of the following?

Accepted Answer

A)  Change the overall conduct of the audit to respond to identified fraud risks. 
B)  Design and perform procedures to address the risk of management override of controls. 
C)  Design and perform audit procedures to address identified risks. 
D)  all of the above 
A)  Change the overall conduct of the audit to respond to identified fraud risks. 
B)  Design and perform procedures to address the risk of management override of controls. 
C)  Design and perform audit procedures to address identified risks. 
D)  all of the above

Question 17

Companies may engage in deliberate attempts to understate accounts payable and overstate income.This can be accomplished by:

Accepted Answer

A)  recording purchase returns. 
B)  recording reductions to accounts payable. 
C)  not recording accounts payable until the subsequent period. 
D)  all of the above 
A)  recording purchase returns. 
B)  recording reductions to accounts payable. 
C)  not recording accounts payable until the subsequent period. 
D)  all of the above

Question 18

How is the risk of fraudulent financial reporting affected when significant judgements and estimates are involved?

Accepted Answer

A)  It is marginally affected. 
B)  It becomes lower than for other entities. 
C)  It is unaffected. 
D)  It becomes higher than for other entities. 
A)  It is marginally affected. 
B)  It becomes lower than for other entities. 
C)  It is unaffected. 
D)  It becomes higher than for other entities.

Question 19

Which of the following is an example of fraudulent financial reporting?

Accepted Answer

A)  management's practice of making unrealistic forecasts to analysts 
B)  misappropriation of assets 
C)  both A and B 
D)  none of the above 
A)  management's practice of making unrealistic forecasts to analysts 
B)  misappropriation of assets 
C)  both A and B 
D)  none of the above

Question 20

Management and the board of directors are responsible for setting the 'tone at the top' for ethical behaviour in the company.Describe how management's actions influence the attitude of all other employees within a company.

Accepted Answer

Honesty and integrity by management rein

Which of the following is the most successful method of uncovering fraud?

Which of the following is NOT a method of the effective audit evidence gathering technique of inquiry?

The primary responsibility of the audit committee is to:

Continuous evaluation of employee compliance with the company's values reduces the likelihood of fraud.

Research shows that the most effective way to deter fraud is to:

Fraud is more prevalent in smaller businesses because:

Describe 'premature revenue recognition' and give an example.

Explain how revenue accounts are especially susceptible to fraud.

A focus on fraud detection is often more effective and less costly than deterrence.

Discuss the role and responsibilities of the audit committee.

The primary responsibility to oversee the organisation's financial reporting and internal control processes lies with:

How does fictitious revenue effect gross margin?

When risks of material misstatements due to fraud are identified, how should auditors adjust their audit approach?

To reduce the potential for theft, fixed assets should be:

Which of the following is a common method of fraudulent financial reporting?

Auditor responses to fraud risk include which of the following?

Companies may engage in deliberate attempts to understate accounts payable and overstate income.This can be accomplished by:

How is the risk of fraudulent financial reporting affected when significant judgements and estimates are involved?

Which of the following is an example of fraudulent financial reporting?

Management and the board of directors are responsible for setting the 'tone at the top' for ethical behaviour in the company.Describe how management's actions influence the attitude of all other employees within a company.

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

Which of the following is the most successful method of uncovering fraud?

Which of the following is NOT a method of the effective audit evidence gathering technique of inquiry?

The primary responsibility of the audit committee is to:

Continuous evaluation of employee compliance with the company's values reduces the likelihood of fraud.

Research shows that the most effective way to deter fraud is to:

Fraud is more prevalent in smaller businesses because:

Describe 'premature revenue recognition' and give an example.

Explain how revenue accounts are especially susceptible to fraud.

A focus on fraud detection is often more effective and less costly than deterrence.

Discuss the role and responsibilities of the audit committee.

The primary responsibility to oversee the organisation's financial reporting and internal control processes lies with:

How does fictitious revenue effect gross margin?

When risks of material misstatements due to fraud are identified, how should auditors adjust their audit approach?

To reduce the potential for theft, fixed assets should be:

Which of the following is a common method of fraudulent financial reporting?

Auditor responses to fraud risk include which of the following?

Companies may engage in deliberate attempts to understate accounts payable and overstate income.This can be accomplished by:

How is the risk of fraudulent financial reporting affected when significant judgements and estimates are involved?

Which of the following is an example of fraudulent financial reporting?

Management and the board of directors are responsible for setting the 'tone at the top' for ethical behaviour in the company.Describe how management's actions influence the attitude of all other employees within a company.

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