Question 1

Auditors should mark the evidence, identifying the location, condition, date, time, and circumstances as soon as it appears to be a signal of fraud.

Accepted Answer

A) True 
 B)False  True

Question 2

An operational audit would NOT include determining ________.

Accepted Answer

A)   Whether the entity is acquiring, protecting, and using its resources effectively.
B)   The effectiveness of an organization and its programs, activities, and functions.
C)   The causes of inefficiencies or uneconomical practices.
D)   Whether the entity has complied with laws and regulations. D

Question 3

Explain briefly the purpose of a value-for-money (VFM) audit.

Accepted Answer

VFM auditing is a form of auditing that focuses on the economical, efficient, and effective use of resources within an organization. A VFM audit is normally conducted in the public sector. The audit is designed to examine and report on:
i. the adequacy of management systems, controls, and practices.
ii. the extent to which resources have been managed economically and efficiently.
iii. the extent to which programs, operations, or activities of an entity have been effective

Question 4

Briefly distinguish between a compliance audit and a value-for-money (VFM) audit.

Accepted Answer

The answer of Briefly distinguish between a compliance audit and...

Question 5

Horizontal analysis can be used in fraud detection by ________.

Accepted Answer

A)   checking the trend in earnings from year to year of persons suspected of fraud
B)   looking for significant changes in financial statement amounts and ratios across several fiscal periods
C)   looking for odd relations of one account to a base such as sales
D)   looking for the change in net worth of a suspect from the beginning to the end of a period

Question 6

In the audit of financial statements, which of the following procedures would the auditor call an "extended procedure?"

Accepted Answer

A)   Measure the time lag between the date that cash receipts are recorded in the accounting records and the date that the deposit is credited to the bank account.
B)   Observe the client's physical inventory count and take test counts of stock in the warehouse.
C)   Send positive confirmations on accounts receivable balances.
D)   Interview the staff in the accounting department and document the controls over the recording of sales transactions.

Question 7

When independent CPAs in public practice take engagements to audit governmental units or entities that receive financial assistance from governmental units, they must follow ________.

Accepted Answer

A)   GAAS only
B)   GAAS and PS
C)   PS only
D)   internal auditing standards

Question 8

Auditors of governmental units would be presumed to be lacking in independence if they were ________.

Accepted Answer

A)   free from sources of external impairment
B)   organizationally independent
C)   members of a political party that campaigned against the program under audit
D)   auditing in a level of government other than the one to which they are normally assigned

Question 9

When financial auditors suspect financial reporting fraud, they should discuss their suspicions with the client to see there is an alternative explanation.

Accepted Answer

A) True 
 B)False

Question 10

Effectiveness refers to outputs of resources maximized for the related inputs and inputs minimized for the related outputs.

Accepted Answer

A) True 
 B)False

Question 11

Forensic accounting can be defined as ________.

Accepted Answer

A)   investigating possible fraud
B)   designing internal controls and other corporate governance mechanisms
C)   calculating estimates used in financial reports
D)   applying accounting and auditing skills in an action under civil or criminal law

Question 12

Economy is related to ________.

Accepted Answer

A)   efficiency variance
B)   volume variance
C)   price variance
D)   capacity variance

Question 13

The nature of extended procedures regarding fraud auditing is limited only by an auditor's imagination.

Accepted Answer

A) True 
 B)False

Question 14

In engagements requiring the use of foreign standards, what are the expectations of Canadian auditors?

Accepted Answer

The answer of In engagements requiring the use of foreign...

Question 15

Canada was among the first of the industrialized countries to pass legislation against the proceeds of crime, money laundering and terrorist financing.

Accepted Answer

A) True 
 B)False

Question 16

Unlike other auditors, fraud examiners think of materiality as a cumulative amount.

Accepted Answer

A) True 
 B)False

Question 17

One of the key differences between a financial statement audit and a value for money (VFM) audit is ________.

Accepted Answer

A)   in most cases, VFM audits have mandates established through legislation or contracts
B)   in a financial statement audit, the auditor has to use his or her professional judgment to redefine the broad mandate in specific terms with specific objectives
C)   in a VFM audit, standards are defined by professions and associations
D)   in a financial statement audit, sufficient appropriate evidence must be obtained to afford a reasonable basis to support the content of the auditor's report

Question 18

If a prospectus is issued more than 90 days beyond the balance sheet date, the auditor will need to perform procedures on interim financial statement information prior to permitting the use of their audit opinion in the prospectus.

Accepted Answer

A) True 
 B)False

Question 19

The environmental audit evaluates a company's operations and performance in terms of conformity with federal, provincial, and municipal laws and regulations.

Accepted Answer

A) True 
 B)False

Question 20

In 20X2, Marg Levy, CPA, performed an environmental audit of Scoop Mining. As a result of that engagement, she prepared a report which included several recommendations to improve compliance with environmental protection laws. In 20X2, Ms. Levy has been approached to perform another audit of environmental protection procedures, some of which are based on her earlier recommendations. Which of the following statements is TRUE?

Accepted Answer

A)   Ms. Levy must decline the audit as it conflicts with her independence.
B)   Ms. Levy must restrict herself to performing specified tests of procedures that were not in her recommendations in order to protect her independence.
C)   Ms. Levy may perform the audit including work on her recommended procedures, as independence is less important in an environmental compliance audit than in a financial statement audit.
D)   Ms. Levy may perform the audit including work on her recommended procedures since she cannot be associated with nonfinancial information, so the concept of independence does not apply.

Exam 21: Other Professional Accounting Services and Reports, Including Fraud

Auditors should mark the evidence, identifying the location, condition, date, time, and circumstances as soon as it appears to be a signal of fraud.

An operational audit would NOT include determining ________.

Explain briefly the purpose of a value-for-money (VFM) audit.

Briefly distinguish between a compliance audit and a value-for-money (VFM) audit.

Horizontal analysis can be used in fraud detection by ________.

In the audit of financial statements, which of the following procedures would the auditor call an "extended procedure?"

When independent CPAs in public practice take engagements to audit governmental units or entities that receive financial assistance from governmental units, they must follow ________.

Auditors of governmental units would be presumed to be lacking in independence if they were ________.

When financial auditors suspect financial reporting fraud, they should discuss their suspicions with the client to see there is an alternative explanation.

Effectiveness refers to outputs of resources maximized for the related inputs and inputs minimized for the related outputs.

Forensic accounting can be defined as ________.

Economy is related to ________.

The nature of extended procedures regarding fraud auditing is limited only by an auditor's imagination.

In engagements requiring the use of foreign standards, what are the expectations of Canadian auditors?

Canada was among the first of the industrialized countries to pass legislation against the proceeds of crime, money laundering and terrorist financing.

Unlike other auditors, fraud examiners think of materiality as a cumulative amount.

One of the key differences between a financial statement audit and a value for money (VFM) audit is ________.

If a prospectus is issued more than 90 days beyond the balance sheet date, the auditor will need to perform procedures on interim financial statement information prior to permitting the use of their audit opinion in the prospectus.

The environmental audit evaluates a company's operations and performance in terms of conformity with federal, provincial, and municipal laws and regulations.