Question 1

Which of the following is ordinarily considered an extended procedure during the independent audit of financial statements?

Accepted Answer

A)  Sending positive confirmations on recorded customer accounts receivable balances. 
B)  Performing physical observation and test count during the client's inventory taking. 
C)  Measuring the time lag between the date of recording cash receipts in the books to the date of the deposit credit in the bank. 
D)  Conducting interviews with the client's sales billing personnel to learn about sales recording control activities. 
A)  Sending positive confirmations on recorded customer accounts receivable balances. 
B)  Performing physical observation and test count during the client's inventory taking. 
C)  Measuring the time lag between the date of recording cash receipts in the books to the date of the deposit credit in the bank. 
D)  Conducting interviews with the client's sales billing personnel to learn about sales recording control activities. C

Question 2

Which of the following statements is correct with respect to the elements of the fraud triangle?

Accepted Answer

A)  Motive is a cause that pressures people into action. 
B)  Opportunity refers to a situation that allows someone with motive to carry out fraud. 
C)  A lack of integrity describes a person who does not stick to the social or organizational ethical code. 
D)  Fraud is most common when these three factors exist together. 
E)  All of the above statements are correct. 
A)  Motive is a cause that pressures people into action. 
B)  Opportunity refers to a situation that allows someone with motive to carry out fraud. 
C)  A lack of integrity describes a person who does not stick to the social or organizational ethical code. 
D)  Fraud is most common when these three factors exist together. 
E)  All of the above statements are correct. E

Question 3

The standard format for the audit approach to fraud cases would not include

Accepted Answer

A)  Audit of balance. 
B)  Test of controls. 
C)  Paper trail. 
D)  Discovery summary. 
A)  Audit of balance. 
B)  Test of controls. 
C)  Paper trail. 
D)  Discovery summary. C

Question 4

Micro Chip Corporation (MCC)has a special post office box to which customers send their payments.Chris is responsible for:
• Going to the post office every day.
• Emptying the post office box and removing the mail.
• Opening the mail.
• Making a prelist.
• Sending the remittance advices to accounts receivable.
• Sending the checks to the cashier's office.
Chris has opened a business account for Master Cleaning Company (MCC)at the bank.Several of Micro Chips checks are made out with only the initials MCC.Chris selects certain checks made out only with the initials MCC and deposits them in the business account and then destroys the remittance advice.
a.Name two controls that would prevent or detect this fraud.
b.Name two audit procedures that might detect this fraud.

Accepted Answer

a.Controls include:
• Having a different

Question 5

Observation of persons'_____________________________ in _____________________________ and _____________________________ may be red flags of employee fraud.

Accepted Answer

changes; h

Question 6

Independent auditors of financial statements and fraud examiners approach their work differently.

Accepted Answer

A) True 
 B)False

Question 7

Most fraud investigators utilize the fraud triangle theory.A new theory called the fraud diamond has been proposed.Which of the following is an element of the fraud diamond that is not an element of the fraud triangle?

Accepted Answer

A)  Motive. 
B)  Opportunity. 
C)  Capability. 
D)  Liquidity. 
A)  Motive. 
B)  Opportunity. 
C)  Capability. 
D)  Liquidity.

Question 8

After checks are signed for vendor invoices,why should vouchers be marked PAID or otherwise mutilated?

Accepted Answer

To show they have be

Question 9

Embezzlement is a type of fraud that involves

Accepted Answer

A)  An employee's misappropriating an employer's money or property not entrusted to him or her. 
B)  A manager's falsification of financial statements for the purpose of misleading investors and creditors. 
C)  An employee's mistaken representation of opinion that causes incorrect accounting entries. 
D)  An employee misappropriating an employer's money or property entrusted to the employee's control in the employee's normal job. 
A)  An employee's misappropriating an employer's money or property not entrusted to him or her. 
B)  A manager's falsification of financial statements for the purpose of misleading investors and creditors. 
C)  An employee's mistaken representation of opinion that causes incorrect accounting entries. 
D)  An employee misappropriating an employer's money or property entrusted to the employee's control in the employee's normal job.

Question 10

___________________________ is the use of fraudulent means to take money or other property from an employer.

Accepted Answer

The answer of ___________________________ is the use of fraudulent means...

Question 11

Simple theft of money or goods not entrusted to an individual is referred to as ____________________________.

Accepted Answer

The answer of Simple theft of money or goods not...

Question 12

An entity with a large volume of customer remittances by mail could most likely reduce the risk of employee misappropriation of cash by using

Accepted Answer

A)  Employee fidelity bonds. 
B)  Independently prepared mailroom prelists. 
C)  Daily check summaries. 
D)  A bank lockbox system. 
A)  Employee fidelity bonds. 
B)  Independently prepared mailroom prelists. 
C)  Daily check summaries. 
D)  A bank lockbox system.

Question 13

At the end of each business day,Safe Company sends its bank a list of all checks written during the day,including the check number,payee,and amount.When a check is sent to the bank for payment,the bank compares the payee and the amount with the list provided by Safe Company.This system is called

Accepted Answer

A)  Paychex. 
B)  Pay-as-you-go. 
C)  Positive pay. 
D)  Pay master. 
A)  Paychex. 
B)  Pay-as-you-go. 
C)  Positive pay. 
D)  Pay master.

Question 14

It is not necessary to send confirmations on accounts that a company represents as closed during the year to get the bank to confirm zero balances.

Accepted Answer

A) True 
 B)False

Question 15

The most effective long-run prevention of fraud lies in the practice of tight management controls over people.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following sets of information does an auditor usually confirm on one form?

Accepted Answer

A)  Accounts payable and purchase commitments. 
B)  Cash in bank and collateral for loans. 
C)  Inventory on consignment and contingent liabilities. 
D)  Accounts receivable and accrued interest receivable. 
A)  Accounts payable and purchase commitments. 
B)  Cash in bank and collateral for loans. 
C)  Inventory on consignment and contingent liabilities. 
D)  Accounts receivable and accrued interest receivable.

Question 17

Auditors ______________________ perform the company's control function of _____________________________ the bank reconciliation.

Accepted Answer

The answer of Auditors ______________________ perform the company's control function...

Question 18

The company's bank reconciliation (audited by independent auditors)is the primary means of valuing cash in the financial statements.

Accepted Answer

A) True 
 B)False

Question 19

The three components of the fraud triangle are ____________________________,____________________________,and ____________________________.

Accepted Answer

motive; op

Question 20

The three necessary elements to commit fraud are the ____________________________,____________________________,and ____________________________.

Accepted Answer

fraud; con

Which of the following is ordinarily considered an extended procedure during the independent audit of financial statements?

Which of the following statements is correct with respect to the elements of the fraud triangle?

The standard format for the audit approach to fraud cases would not include

Observation of persons'_______________ in _ and _______________ may be red flags of employee fraud.

Independent auditors of financial statements and fraud examiners approach their work differently.

Most fraud investigators utilize the fraud triangle theory.A new theory called the fraud diamond has been proposed.Which of the following is an element of the fraud diamond that is not an element of the fraud triangle?

After checks are signed for vendor invoices,why should vouchers be marked PAID or otherwise mutilated?

Embezzlement is a type of fraud that involves

___________________________ is the use of fraudulent means to take money or other property from an employer.

Simple theft of money or goods not entrusted to an individual is referred to as ____________________________.

An entity with a large volume of customer remittances by mail could most likely reduce the risk of employee misappropriation of cash by using

At the end of each business day,Safe Company sends its bank a list of all checks written during the day,including the check number,payee,and amount.When a check is sent to the bank for payment,the bank compares the payee and the amount with the list provided by Safe Company.This system is called

It is not necessary to send confirmations on accounts that a company represents as closed during the year to get the bank to confirm zero balances.

The most effective long-run prevention of fraud lies in the practice of tight management controls over people.

Which of the following sets of information does an auditor usually confirm on one form?

Auditors perform the company's control function of _______ the bank reconciliation.

The company's bank reconciliation (audited by independent auditors)is the primary means of valuing cash in the financial statements.

The three components of the fraud triangle are ,,and .

The three necessary elements to commit fraud are the ,,and .

Auditing and Assurance Services

Professional Standards

Engagement Planning

Management Fraud and Audit Risk

Risk Assessment: Internal Control Evaluation

Revenue and Collection Cycle

Acquisition and Expenditure Cycle

Production Cycle

Finance and Investment Cycle

Completing the Audit

Reports on Audited Financial Statements

Other Public Accounting Services

Professional Ethics

Legal Liability

Internal Governmental and Fraud Audits

Overview of Sampling

Attributes Sampling

Variables Sampling

Auditing in a Computerized Environment

Filters

Exam 6: Employee Fraud and the Audit of Cash

Which of the following is ordinarily considered an extended procedure during the independent audit of financial statements?

Which of the following statements is correct with respect to the elements of the fraud triangle?

The standard format for the audit approach to fraud cases would not include

Observation of persons'_____________________________ in _____________________________ and _____________________________ may be red flags of employee fraud.

Independent auditors of financial statements and fraud examiners approach their work differently.

Most fraud investigators utilize the fraud triangle theory.A new theory called the fraud diamond has been proposed.Which of the following is an element of the fraud diamond that is not an element of the fraud triangle?

After checks are signed for vendor invoices,why should vouchers be marked PAID or otherwise mutilated?

Embezzlement is a type of fraud that involves

___________________________ is the use of fraudulent means to take money or other property from an employer.

Simple theft of money or goods not entrusted to an individual is referred to as ____________________________.

An entity with a large volume of customer remittances by mail could most likely reduce the risk of employee misappropriation of cash by using

At the end of each business day,Safe Company sends its bank a list of all checks written during the day,including the check number,payee,and amount.When a check is sent to the bank for payment,the bank compares the payee and the amount with the list provided by Safe Company.This system is called

It is not necessary to send confirmations on accounts that a company represents as closed during the year to get the bank to confirm zero balances.

The most effective long-run prevention of fraud lies in the practice of tight management controls over people.

Which of the following sets of information does an auditor usually confirm on one form?

Auditors ______________________ perform the company's control function of _____________________________ the bank reconciliation.

The company's bank reconciliation (audited by independent auditors)is the primary means of valuing cash in the financial statements.

The three components of the fraud triangle are ____________________________,____________________________,and ____________________________.

The three necessary elements to commit fraud are the ____________________________,____________________________,and ____________________________.

Auditing and Assurance Services

Professional Standards

Engagement Planning

Management Fraud and Audit Risk

Risk Assessment: Internal Control Evaluation

Revenue and Collection Cycle

Acquisition and Expenditure Cycle

Production Cycle

Finance and Investment Cycle

Completing the Audit

Reports on Audited Financial Statements

Other Public Accounting Services

Professional Ethics

Legal Liability

Internal Governmental and Fraud Audits

Overview of Sampling

Attributes Sampling

Variables Sampling

Auditing in a Computerized Environment

Filters

Observation of persons'_______________ in _ and _______________ may be red flags of employee fraud.

Auditors perform the company's control function of _______ the bank reconciliation.

The three components of the fraud triangle are ,,and .

The three necessary elements to commit fraud are the ,,and .