Question 1

The difference between an error in the financial statements as compared to fraud is:

Accepted Answer

A) An error is always an intentional act designed to deceive another party 
B) Fraud is always an intentional act designed to deceive another party 
C) An error always leads to a qualification of the auditors' opinion 
D) Fraudulent financial reporting is always material in amount 
A) An error is always an intentional act designed to deceive another party 
B) Fraud is always an intentional act designed to deceive another party 
C) An error always leads to a qualification of the auditors' opinion 
D) Fraudulent financial reporting is always material in amount

Question 2

Differentiate between the auditors' responsibilities to detect errors, fraud, and illegal acts.How would you assess the ethics of a company that has experienced each event with respect to motivation and the integrity of those who go along with such events?

Accepted Answer

The answer of Differentiate between the auditors' responsibilities to detect...

Question 3

Kohlberg's model addresses the stages of moral development a person might move through in developing a strong sense of ethics.Analyze each of those stages with respect to the three elements of the fraud triangle.How can an individual resist the temptation to become involved in fraud by possessing the characteristics of behavior included in each stage?

Accepted Answer

Kohlberg's model of moral development co

Question 4

In which of the following circumstances would an adverse opinion be appropriate?

Accepted Answer

A) An uncertainty prevents the issuance of a standard unqualified opinion. 
B) The statements are not in conformity with generally accepted accounting principles regarding stock options plans. 
C) The auditor has been unable to obtain sufficient competent evidential matter. 
D) The principal auditors decide to make reference to the report of another auditor who audited a subsidiary. 
A) An uncertainty prevents the issuance of a standard unqualified opinion. 
B) The statements are not in conformity with generally accepted accounting principles regarding stock options plans. 
C) The auditor has been unable to obtain sufficient competent evidential matter. 
D) The principal auditors decide to make reference to the report of another auditor who audited a subsidiary.

Question 5

In the Tyco fraud the corporate governance system completely broke down.Explain the failings in the corporate governance system at Tyco and how the Sarbanes-Oxley Act addresses those failings.

Accepted Answer

The failings in the corporate governance

Question 6

Some critics claim the usefulness of the audit report is limited because:

Accepted Answer

A) Auditors do not examine all of the transactions 
B) Language in the audit report relies on subjective evaluations such as what is meant by "reasonable" 
C) Transactions examined are based on materiality and risk assessment determinations 
D) All of the above may create doubts about usefulness 
A) Auditors do not examine all of the transactions 
B) Language in the audit report relies on subjective evaluations such as what is meant by "reasonable" 
C) Transactions examined are based on materiality and risk assessment determinations 
D) All of the above may create doubts about usefulness

Question 7

Explain each of the three sides of the fraud triangle (SAS 99) with respect to how it contributes toward the possibility that fraud in the financial statements may be present.

Accepted Answer

The three sides of the fraud triangle, a

Question 8

Deliberately underbidding for an audit engagement to obtain a client and secure more lucrative management advisory or consulting services is known as:

Accepted Answer

A) Opinion shopping 
B) High-balling 
C) Low-balling 
D) Client shopping 
A) Opinion shopping 
B) High-balling 
C) Low-balling 
D) Client shopping

Question 9

Which of the following is not part of the fraud triangle?

Accepted Answer

A) Incentives 
B) Opportunity 
C) Materiality 
D) Rationalization 
A) Incentives 
B) Opportunity 
C) Materiality 
D) Rationalization

Question 10

Which of the following is not an element of COSO Enterprise Risk Management?

Accepted Answer

A) Enhancing risk response decisions 
B) Reducing operating surprises and losses 
C) Seizing opportunities 
D) Improving deployment of information technology 
A) Enhancing risk response decisions 
B) Reducing operating surprises and losses 
C) Seizing opportunities 
D) Improving deployment of information technology

Question 11

Mr.Arty works for Smile Accounting Firm as a senior accountant.Currently he is doing review of rental property compliance testing completed by the staff accountants.He realizes that the staff accountants only tested two tenants per property instead of the required three by the audit program.To request more information from the client would cause massive delays and the manager is pressing hard for the information before the Christmas vacation.What should Mr.Arty do and why? Use the ethical theory and ethical decision making model to discuss the situation.

Accepted Answer

Mr. Arty is facing a difficult ethical d

Question 12

In the General Electric case, each of the following allegations were made against the company except for the following:

Accepted Answer

A) Offered to sell company securities during the period when the company issued materially misleading financial statements 
B) Obtained money or property by the use of untrue statements of material facts or omission of material information 
C) Misuse of company resources by members of top management 
D) Failure to maintain an internal control system sufficient to provide reasonable assurance that the financial statements were prepared in conformity with GAAP 
A) Offered to sell company securities during the period when the company issued materially misleading financial statements 
B) Obtained money or property by the use of untrue statements of material facts or omission of material information 
C) Misuse of company resources by members of top management 
D) Failure to maintain an internal control system sufficient to provide reasonable assurance that the financial statements were prepared in conformity with GAAP

Question 13

Which of the following is not an area of fraud considerations detailed by SAS 99?

Accepted Answer

A) Assessing the impact of fraud 
B) Professional skepticism about fraud 
C) Identifying risks of fraud 
D) Characteristics of fraud 
A) Assessing the impact of fraud 
B) Professional skepticism about fraud 
C) Identifying risks of fraud 
D) Characteristics of fraud

Question 14

The primary accounting issue in the Royal Ahold case is:

Accepted Answer

A) Fraudulent recording of revenues on sales to customers 
B) Fraudulent use of company resources by top management for personal purposes 
C) Fraudulent inflation of promotional allowances to increase operating income 
D) Fraudulent inflation of inventory to reduce losses on the income statement
Essay Questions 
A) Fraudulent recording of revenues on sales to customers 
B) Fraudulent use of company resources by top management for personal purposes 
C) Fraudulent inflation of promotional allowances to increase operating income 
D) Fraudulent inflation of inventory to reduce losses on the income statement
Essay Questions

Question 15

Which of the following summarizes the essence of field work standards of GAAS?

Accepted Answer

A) Quality of professionals that perform an audit 
B) Criteria for judging the quality of audit work 
C) Whether the auditor was independent in conducting the audit 
D) Whether the auditor reviewed the client's financial statements for adherence to GAAP 
A) Quality of professionals that perform an audit 
B) Criteria for judging the quality of audit work 
C) Whether the auditor was independent in conducting the audit 
D) Whether the auditor reviewed the client's financial statements for adherence to GAAP

Question 16

Each of the following represents a pressure that might lead to fraud except for:

Accepted Answer

A) Desire to maximize the value of stock options 
B) Budget pressures 
C) Meet financial analysts' earnings expectations 
D) Inadequate internal controls 
A) Desire to maximize the value of stock options 
B) Budget pressures 
C) Meet financial analysts' earnings expectations 
D) Inadequate internal controls

Question 17

Because of the risk of material misstatement, an audit of financial statements in accordance with GAAS should be planned and performed with an attitude of

Accepted Answer

A) Objective judgment 
B) Professional skepticism 
C) Independent integrity 
D) Impartial conservatism 
A) Objective judgment 
B) Professional skepticism 
C) Independent integrity 
D) Impartial conservatism

Question 18

Materiality is one of the most difficult judgments to make in auditing financial statements.Explain what is meant by materiality and explain the basis for the auditor's assessment of whether there is a material misstatement in the financial statements.

Accepted Answer

Materiality in auditing refers to the co

Question 19

The framework of COSO Enterprise Risk Management is to

Accepted Answer

A) Incorporate enhanced internal control principles into enhanced corporate governance. 
B) Incorporate enhanced audit sampling procedures in the testing of internal controls. 
C) Incorporate enhanced corporate governance into internal control principles. 
D) Incorporate enhanced audit sampling procedures in substantive testing. 
A) Incorporate enhanced internal control principles into enhanced corporate governance. 
B) Incorporate enhanced audit sampling procedures in the testing of internal controls. 
C) Incorporate enhanced corporate governance into internal control principles. 
D) Incorporate enhanced audit sampling procedures in substantive testing.

Question 20

Which of the following summarizes the essence of general standards of GAAS?

Accepted Answer

A) Quality of professionals that perform an audit 
B) Criteria used to judge whether the audit has met quality requirements 
C) The standards that guide auditors in issuing the audit report 
D) Whether the auditor obtained sufficient competent evidential matter to render an opinion 
A) Quality of professionals that perform an audit 
B) Criteria used to judge whether the audit has met quality requirements 
C) The standards that guide auditors in issuing the audit report 
D) Whether the auditor obtained sufficient competent evidential matter to render an opinion

The difference between an error in the financial statements as compared to fraud is:

Differentiate between the auditors' responsibilities to detect errors, fraud, and illegal acts.How would you assess the ethics of a company that has experienced each event with respect to motivation and the integrity of those who go along with such events?

In which of the following circumstances would an adverse opinion be appropriate?

In the Tyco fraud the corporate governance system completely broke down.Explain the failings in the corporate governance system at Tyco and how the Sarbanes-Oxley Act addresses those failings.

Some critics claim the usefulness of the audit report is limited because:

Explain each of the three sides of the fraud triangle (SAS 99) with respect to how it contributes toward the possibility that fraud in the financial statements may be present.

Deliberately underbidding for an audit engagement to obtain a client and secure more lucrative management advisory or consulting services is known as:

Which of the following is not part of the fraud triangle?

Which of the following is not an element of COSO Enterprise Risk Management?

In the General Electric case, each of the following allegations were made against the company except for the following:

Which of the following is not an area of fraud considerations detailed by SAS 99?

The primary accounting issue in the Royal Ahold case is:

Which of the following summarizes the essence of field work standards of GAAS?

Each of the following represents a pressure that might lead to fraud except for:

Because of the risk of material misstatement, an audit of financial statements in accordance with GAAS should be planned and performed with an attitude of

Materiality is one of the most difficult judgments to make in auditing financial statements.Explain what is meant by materiality and explain the basis for the auditor's assessment of whether there is a material misstatement in the financial statements.

The framework of COSO Enterprise Risk Management is to

Which of the following summarizes the essence of general standards of GAAS?

Ethical Reasoning Implications for Accounting

Accountants Ethical Decision Process and Professional Judgment

Corporate Governance and Ethical Management

Aicpa Code of Professional Conduct

Legal and Regulatory Obligations in an Ethical Framework

Earnings Management and the Quality of Financial Reporting

International Financial Reporting: Ethics and Corporate Governance Considerations

Filters

Exam 5: Audit Responsibilities and Accounting Fraud

The difference between an error in the financial statements as compared to fraud is:

Differentiate between the auditors' responsibilities to detect errors, fraud, and illegal acts.How would you assess the ethics of a company that has experienced each event with respect to motivation and the integrity of those who go along with such events?

In which of the following circumstances would an adverse opinion be appropriate?

In the Tyco fraud the corporate governance system completely broke down.Explain the failings in the corporate governance system at Tyco and how the Sarbanes-Oxley Act addresses those failings.

Some critics claim the usefulness of the audit report is limited because:

Explain each of the three sides of the fraud triangle (SAS 99) with respect to how it contributes toward the possibility that fraud in the financial statements may be present.

Deliberately underbidding for an audit engagement to obtain a client and secure more lucrative management advisory or consulting services is known as:

Which of the following is not part of the fraud triangle?

Which of the following is not an element of COSO Enterprise Risk Management?

In the General Electric case, each of the following allegations were made against the company except for the following:

Which of the following is not an area of fraud considerations detailed by SAS 99?

The primary accounting issue in the Royal Ahold case is:

Which of the following summarizes the essence of field work standards of GAAS?

Each of the following represents a pressure that might lead to fraud except for:

Because of the risk of material misstatement, an audit of financial statements in accordance with GAAS should be planned and performed with an attitude of

Materiality is one of the most difficult judgments to make in auditing financial statements.Explain what is meant by materiality and explain the basis for the auditor's assessment of whether there is a material misstatement in the financial statements.

The framework of COSO Enterprise Risk Management is to

Which of the following summarizes the essence of general standards of GAAS?

Ethical Reasoning Implications for Accounting

Accountants Ethical Decision Process and Professional Judgment

Corporate Governance and Ethical Management

Aicpa Code of Professional Conduct

Legal and Regulatory Obligations in an Ethical Framework

Earnings Management and the Quality of Financial Reporting

International Financial Reporting: Ethics and Corporate Governance Considerations

Filters