Question 1

Fraud is more prevalent in large businesses than small businesses and not-for-profit organizations.

Accepted Answer

A) True 
 B)False

Question 2

Fraudulent financial reporting usually involves manipulation of amounts rather than disclosures.

Accepted Answer

A) True 
 B)False

Question 3

Fraud awareness training should be

Accepted Answer

A) broad and all-encompassing. 
B) extensive and include details for all functional areas. 
C) specifically related to the employee's job responsibility. 
D) focused on employees understanding the importance of ethics. 
A) broad and all-encompassing. 
B) extensive and include details for all functional areas. 
C) specifically related to the employee's job responsibility. 
D) focused on employees understanding the importance of ethics.

Question 4

Auditing standards require that the auditor presume that there is a risk of fraud in revenue recognition.

Accepted Answer

A) True 
 B)False

Question 5

Most frauds are discovered by accident.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is not a category of inquiry used by auditors?

Accepted Answer

A) assessment inquiry 
B) declarative inquiry 
C) interrogative inquiry 
D) informational inquiry 
A) assessment inquiry 
B) declarative inquiry 
C) interrogative inquiry 
D) informational inquiry

Question 7

According to the Association of Certified Fraud Examiners,losses from misappropriation schemes are higher than losses from financial statement frauds.

Accepted Answer

A) True 
 B)False

Question 8

Company management is often under pressure to increase revenue and/or net income.One approach is to use a "bill and hold" arrangement.This is an example of which of the following?

Accepted Answer

A) significant accounting estimates 
B) fictitious revenue recorded 
C) premature revenue recognized 
D) alteration of cutoff documents 
A) significant accounting estimates 
B) fictitious revenue recorded 
C) premature revenue recognized 
D) alteration of cutoff documents

Question 9

List the three main types of revenue manipulations employed to commit fraudulent financial reporting and give an example for each type.

Accepted Answer

The three main types of revenue manipula

Question 10

Which of the following is not one of the elements to prevent,deter,and detect fraud according to the AICPA?

Accepted Answer

A) performing analytical procedures 
B) culture of honesty and high ethics 
C) management's responsibility to evaluate risks of fraud 
D) audit committee oversight 
A) performing analytical procedures 
B) culture of honesty and high ethics 
C) management's responsibility to evaluate risks of fraud 
D) audit committee oversight

Question 11

Auditing standards require that auditors document

Accepted Answer

A) specific risks of fraud identified at the financial statement level,but not at the assertion level. 
B) all conversations with management. 
C) results of the procedures performed to address the risk of management override of controls. 
D) all of the above. 
A) specific risks of fraud identified at the financial statement level,but not at the assertion level. 
B) all conversations with management. 
C) results of the procedures performed to address the risk of management override of controls. 
D) all of the above.

Question 12

"Cookie jar reserves" are often created by companies whenever their earnings are low to create reserves for future periods when earnings need to be "boosted" upward.

Accepted Answer

A) True 
 B)False

Question 13

Analytical procedures can be very effective in detecting inventory fraud.Which of the following analytical procedures would not be useful in detecting fraud?

Accepted Answer

A) gross margin percentage 
B) inventory turnover 
C) cost of sales percentage 
D) accounts receivable turnover 
A) gross margin percentage 
B) inventory turnover 
C) cost of sales percentage 
D) accounts receivable turnover

Question 14

The presence of fraud risk factors increases the likelihood of fraud and may suggest that fraud is being perpetrated.

Accepted Answer

A) True 
 B)False

Question 15

As part of the brainstorming sessions,auditors are directed to emphasize

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 16

Auditors should rely on original,rather than duplicate,copies of documents.

Accepted Answer

A) True 
 B)False

Question 17

The two main categories of fraud are fraudulent financial reporting and misappropriation of assets.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is a factor that relates to attitudes or rationalization to misappropriate assets?

Accepted Answer

A) significant accounting estimates involving subjective judgments 
B) excessive pressure for management to meet debt repayment requirements 
C) a sense of superiority by executives 
D) high turnover of accounting,internal audit and information technology staff 
A) significant accounting estimates involving subjective judgments 
B) excessive pressure for management to meet debt repayment requirements 
C) a sense of superiority by executives 
D) high turnover of accounting,internal audit and information technology staff

Question 19

Which party has the primary responsibility to oversee an organization's financial reporting and internal control process?

Accepted Answer

A) the board of directors 
B) the audit committee 
C) management of the company 
D) the financial statement auditors 
A) the board of directors 
B) the audit committee 
C) management of the company 
D) the financial statement auditors

Question 20

The auditor has a responsibility to notify law enforcement when fraud is suspected.

Accepted Answer

A) True 
 B)False

Exam 10: Fraud Auditing

Fraud is more prevalent in large businesses than small businesses and not-for-profit organizations.

Fraudulent financial reporting usually involves manipulation of amounts rather than disclosures.

Fraud awareness training should be

Auditing standards require that the auditor presume that there is a risk of fraud in revenue recognition.

Most frauds are discovered by accident.

Which of the following is not a category of inquiry used by auditors?

According to the Association of Certified Fraud Examiners,losses from misappropriation schemes are higher than losses from financial statement frauds.

Company management is often under pressure to increase revenue and/or net income.One approach is to use a "bill and hold" arrangement.This is an example of which of the following?

List the three main types of revenue manipulations employed to commit fraudulent financial reporting and give an example for each type.

Which of the following is not one of the elements to prevent,deter,and detect fraud according to the AICPA?

Auditing standards require that auditors document

"Cookie jar reserves" are often created by companies whenever their earnings are low to create reserves for future periods when earnings need to be "boosted" upward.

Analytical procedures can be very effective in detecting inventory fraud.Which of the following analytical procedures would not be useful in detecting fraud?

The presence of fraud risk factors increases the likelihood of fraud and may suggest that fraud is being perpetrated.

As part of the brainstorming sessions,auditors are directed to emphasize

Auditors should rely on original,rather than duplicate,copies of documents.

The two main categories of fraud are fraudulent financial reporting and misappropriation of assets.

Which of the following is a factor that relates to attitudes or rationalization to misappropriate assets?

Which party has the primary responsibility to oversee an organization's financial reporting and internal control process?

The auditor has a responsibility to notify law enforcement when fraud is suspected.

The Demand for Audit and Other Assurance Services

The Cpa Profession

Audit Reports

Professional Ethics

Legal Liability

Audit Responsibilities and Objectives

Audit Evidence

Audit Planning and Analytical Procedures

Materiality and Risk

Internal Control and Coso Framework

Assessing Control Risk and Reporting on Internal Controls

Overall Audit Strategy and Audit Program

Audit of the Sales and Collection Cycle: Tests of Controls

Audit Sampling for Tests of Controls and Substantive Tests of Transactions

Completing the Tests in the Sales and Collection Cycle: Accounts Receivable

Audit Sampling for Tests of Details of Balances

Audit of the Acquisition and Payment Cycle: Tests of Controls,

Completing the Tests in the Acquisition and Payment Cycle:

Audit of the Payroll and Personnel Cycle

Audit of the Inventory and Warehousing Cycle

Audit of the Capital Acquisition and Repayment Cycle

Audit of Cash and Financial Instruments

Completing the Audit

Other Assurance Services

Internal and Governmental Financial Auditing and Operational Auditing

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