Question 1

As part of designing and performing procedures to address management override of controls,auditors must perform which of the following procedures?

Accepted Answer

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

Question 2

Fictitious revenue transactions have the same level of documentary evidence as legitimate transactions.

Accepted Answer

A) True 
 B)False

Question 3

Companies may intentionally understate earnings when income is high to create ________ that may be used in future years to increase earnings.

Accepted Answer

A) income smoothing 
B) cookie jar reserves 
C) cash 
D) sales 
A) income smoothing 
B) cookie jar reserves 
C) cash 
D) sales

Question 4

Which of the following is an accurate statement regarding the misappropriation of assets?

Accepted Answer

A) In most cases,the amounts involved are material to the financial statements. 
B) Misappropriation of assets can easily increase in size over time and can lead to significant reputational harm. 
C) Management should not be concerned about minor misappropriations. 
D) Asset misappropriation schemes are less common than fraudulent financial statement schemes. 
A) In most cases,the amounts involved are material to the financial statements. 
B) Misappropriation of assets can easily increase in size over time and can lead to significant reputational harm. 
C) Management should not be concerned about minor misappropriations. 
D) Asset misappropriation schemes are less common than fraudulent financial statement schemes.

Question 5

Which of the following is not a likely source of information to assess fraud risks?

Accepted Answer

A) communications among audit team members 
B) inquiries of management 
C) analytical procedures 
D) consideration of fraud risks discovered during recent audits of other clients 
A) communications among audit team members 
B) inquiries of management 
C) analytical procedures 
D) consideration of fraud risks discovered during recent audits of other clients

Question 6

Information and idea exchange sessions by the audit team are required by current auditing standards.

Accepted Answer

A) True 
 B)False

Question 7

According to a KPMG survey,most fraud perpetrators

Accepted Answer

A) are over the age of 65. 
B) work on the assembly line. 
C) have worked for the company for over ten years. 
D) are female. 
A) are over the age of 65. 
B) work on the assembly line. 
C) have worked for the company for over ten years. 
D) are female.

Question 8

Which of the following questions is the auditor not required to ask company management when assessing fraud risk?

Accepted Answer

A) Does management have knowledge of any fraud or suspected fraud within the company? 
B) What is the nature of the fraud risks identified by management? 
C) Is management using all assets effectively? 
D) What internal controls have been implemented to address the fraud risks? 
A) Does management have knowledge of any fraud or suspected fraud within the company? 
B) What is the nature of the fraud risks identified by management? 
C) Is management using all assets effectively? 
D) What internal controls have been implemented to address the fraud risks?

Question 9

According to the Association of Certified Fraud Examiners,the average company loses ________ percent of its revenues to fraud.

Accepted Answer

A) one 
B) five 
C) ten 
D) fifteen 
A) one 
B) five 
C) ten 
D) fifteen

Question 10

Which of the following is a category of fraud?

Accepted Answer

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

Question 11

Fraudulent financial reporting is an intentional misstatement or omission of amounts or disclosures with the intent to deceive users.

Accepted Answer

A) True 
 B)False

Question 12

List and briefly describe the three conditions for fraud.

Accepted Answer

•Incentives/pressures - Management or ot

Question 13

Briefly discuss the brainstorming session required by current auditing standards.Be sure to include a list of ideas that should be addressed in the session.

Accepted Answer

Auditing standards require the audit tea

Question 14

Describe the five sources of information gathered to assess fraud risks.

Accepted Answer

The five sources of information to asses

Question 15

Which of the following is the best reason for management to emphasize fraud prevention and deterrence?

Accepted Answer

A) It is often more effective and economical for companies to focus on fraud prevention and deterrence rather than on fraud detection. 
B) Collusion is impossible to detect. 
C) The AICPA requires management to implement a fraud prevention program. 
D) All of the above are equally valid reasons. 
A) It is often more effective and economical for companies to focus on fraud prevention and deterrence rather than on fraud detection. 
B) Collusion is impossible to detect. 
C) The AICPA requires management to implement a fraud prevention program. 
D) All of the above are equally valid reasons.

Question 16

Relating to opportunities,why do most people commit fraud?

Accepted Answer

A) They need to fund an extravagant lifestyle. 
B) They feel a sense of superiority. 
C) There are weak internal controls. 
D) They need to meet pre-specified business targets. 
A) They need to fund an extravagant lifestyle. 
B) They feel a sense of superiority. 
C) There are weak internal controls. 
D) They need to meet pre-specified business targets.

Question 17

Which of the following is a form of earnings management in which revenues and expenses are shifted between periods to reduce fluctuations in earnings?

Accepted Answer

A) fraudulent financial reporting 
B) expense smoothing 
C) income smoothing 
D) Each of the above is correct. 
A) fraudulent financial reporting 
B) expense smoothing 
C) income smoothing 
D) Each of the above is correct.

Question 18

For significant risks,including fraud risks,the auditor should obtain an understanding of the internal controls related to the risks.

Accepted Answer

A) True 
 B)False

Question 19

When assessing the risk for fraud,the auditor must be cognizant of the fact that

Accepted Answer

A) the existence of fraud risk factors means fraud exists. 
B) analytical procedures must be performed on revenue accounts. 
C) horizontal analysis is not useful in helping to determine unusual financial statement relationships. 
D) the auditor cannot make inquiries about fraud to company personnel who have no financial statement responsibilities. 
A) the existence of fraud risk factors means fraud exists. 
B) analytical procedures must be performed on revenue accounts. 
C) horizontal analysis is not useful in helping to determine unusual financial statement relationships. 
D) the auditor cannot make inquiries about fraud to company personnel who have no financial statement responsibilities.

Question 20

An effective code of conduct should contain the company's policies regarding

Accepted Answer

A) conflicts of interests. 
B) kickbacks. 
C) gifts and entertainment. 
D) all of the above. 
A) conflicts of interests. 
B) kickbacks. 
C) gifts and entertainment. 
D) all of the above.

Exam 10: Fraud Auditing

As part of designing and performing procedures to address management override of controls,auditors must perform which of the following procedures?

Fictitious revenue transactions have the same level of documentary evidence as legitimate transactions.

Companies may intentionally understate earnings when income is high to create ________ that may be used in future years to increase earnings.

Which of the following is an accurate statement regarding the misappropriation of assets?

Which of the following is not a likely source of information to assess fraud risks?

Information and idea exchange sessions by the audit team are required by current auditing standards.

According to a KPMG survey,most fraud perpetrators

Which of the following questions is the auditor not required to ask company management when assessing fraud risk?

According to the Association of Certified Fraud Examiners,the average company loses ________ percent of its revenues to fraud.

Which of the following is a category of fraud?

Fraudulent financial reporting is an intentional misstatement or omission of amounts or disclosures with the intent to deceive users.

List and briefly describe the three conditions for fraud.

Briefly discuss the brainstorming session required by current auditing standards.Be sure to include a list of ideas that should be addressed in the session.

Describe the five sources of information gathered to assess fraud risks.

Which of the following is the best reason for management to emphasize fraud prevention and deterrence?

Relating to opportunities,why do most people commit fraud?

Which of the following is a form of earnings management in which revenues and expenses are shifted between periods to reduce fluctuations in earnings?

For significant risks,including fraud risks,the auditor should obtain an understanding of the internal controls related to the risks.

When assessing the risk for fraud,the auditor must be cognizant of the fact that

An effective code of conduct should contain the company's policies regarding

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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