Question 1

The characteristics of people who commit the largest frauds would not include

Accepted Answer

A)  Hold middle management positions. 
B)  Have power to override controls. 
C)  Have long tenure with organization. 
D)  Have access to large amounts of money. 
A)  Hold middle management positions. 
B)  Have power to override controls. 
C)  Have long tenure with organization. 
D)  Have access to large amounts of money.

Question 2

One of the main requirements under GAAS relating to fraud in a financial statement audit is that auditors obtain evidence about the intent of the persons responsible for the fraud.

Accepted Answer

A) True 
 B)False

Question 3

A _____________________________ is some pressure experienced by a person who believes that it can't be shared with friends and confidants.

Accepted Answer

The answer of A _____________________________ is some pressure experienced by...

Question 4

An auditor who discovers that client employees have committed an illegal act that has a material effect on the client's financial statements most likely would withdraw from the engagement if

Accepted Answer

A)  The illegal act is a violation of generally accepted accounting principles. 
B)  The client does not take the remedial action that the auditor considers necessary. 
C)  The illegal act was committed during a prior year that was not audited. 
D)  The auditor has already assessed control risk at the maximum level. 
A)  The illegal act is a violation of generally accepted accounting principles. 
B)  The client does not take the remedial action that the auditor considers necessary. 
C)  The illegal act was committed during a prior year that was not audited. 
D)  The auditor has already assessed control risk at the maximum level.

Question 5

Employee fraud is an intentional act that injures investors or creditors by leading to materially misleading financial statements.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is an effective audit procedure that an auditor might use to detect kiting between intercompany banks?

Accepted Answer

A)  Review the composition of authenticated deposit slips. 
B)  Review subsequent bank statements. 
C)  Prepare a schedule of the bank transfers. 
D)  Prepare a year-end bank reconciliation. 
A)  Review the composition of authenticated deposit slips. 
B)  Review subsequent bank statements. 
C)  Prepare a schedule of the bank transfers. 
D)  Prepare a year-end bank reconciliation.

Question 7

Which question would not be appropriate when asking questions of personnel during a regular audit?

Accepted Answer

A)  Do you think fraud is a problem for business in general? 
B)  Do you think this company has any particular problem with fraud? 
C)  In your department, who has the potential for committing fraud? 
D)  Is there any information you would like to furnish regarding possible fraud within this organization? 
A)  Do you think fraud is a problem for business in general? 
B)  Do you think this company has any particular problem with fraud? 
C)  In your department, who has the potential for committing fraud? 
D)  Is there any information you would like to furnish regarding possible fraud within this organization?

Question 8

Which of the following control activities could prevent a paid disbursement voucher from being presented for payment a second time?

Accepted Answer

A)  Vouchers should be prepared by individuals who are responsible for signing disbursement checks. 
B)  Disbursement vouchers should be approved by at least two responsible management officials. 
C)  The date on a disbursement voucher should be within a few days of the date the voucher is presented for payment. 
D)  The official signing the check should compare the check with the voucher and should stamp "paid" on the voucher documents. 
A)  Vouchers should be prepared by individuals who are responsible for signing disbursement checks. 
B)  Disbursement vouchers should be approved by at least two responsible management officials. 
C)  The date on a disbursement voucher should be within a few days of the date the voucher is presented for payment. 
D)  The official signing the check should compare the check with the voucher and should stamp "paid" on the voucher documents.

Question 9

Which of the following is least indicative of fraudulent activity?

Accepted Answer

A)  Numerous cash refunds have been made to different people at the same post office box address. 
B)  Internal auditors cannot locate several credit memos to support reductions of customers' balances. 
C)  Bank reconciliation has no outstanding checks or deposits older than 15 days. 
D)  Three people were absent the day the auditors handed out the paychecks and have not picked them up four weeks later. 
A)  Numerous cash refunds have been made to different people at the same post office box address. 
B)  Internal auditors cannot locate several credit memos to support reductions of customers' balances. 
C)  Bank reconciliation has no outstanding checks or deposits older than 15 days. 
D)  Three people were absent the day the auditors handed out the paychecks and have not picked them up four weeks later.

Question 10

As payments are received,one mailroom employee is assigned the responsibility of prelisting receipts and preparing the deposit slip prior to forwarding the receipts,deposit slip,and remittance advices to accounts receivable for posting.Accounts receivable personnel refoot the deposit slip,stamp a restrictive endorsement on the back of each check,and then forward the receipts and deposit slip to the treasury department.Evaluate the internal control of the described process.Which of the following is a reasonable assessment of internal control in this process?

Accepted Answer

A)  Adequate internal control. 
B)  Inadequate internal control because mailroom employees should not have access to cash. 
C)  Inadequate internal control because treasury employees should prepare the deposit slip. 
D)  Inadequate internal control because of a lack of separation of duties. 
A)  Adequate internal control. 
B)  Inadequate internal control because mailroom employees should not have access to cash. 
C)  Inadequate internal control because treasury employees should prepare the deposit slip. 
D)  Inadequate internal control because of a lack of separation of duties.

Question 11

Fraud awareness auditing includes "thinking like a crook" to imagine ways and means of stealing.

Accepted Answer

A) True 
 B)False

Question 12

Auditors are auditing the cash receipts for Great Wall Corporation.For each audit procedure performed (numbered 1-5),select the control objective being tested by placing the correct letter in the blank.
A.Existence
B.Completeness
C.Authorization
D.Accuracy
E.Classification
F.Accounting and posting
G.Proper period
______ 1.For a sample of recorded cash receipts,the auditors compared the date of receipt to the recording date.
______ 2.The auditors traced a sample of daily cash reports to the cash receipts journal.
______ 3.The auditors vouched a sample of recorded cash receipts to the deposits in the bank statement.
______ 4.The auditors recalculate the cash listed on the daily deposit for a sample of recorded cash receipts.
______ 5.The auditors traced a sample of recorded cash receipts to postings in the correct customers' accounts.

Accepted Answer

1.G; 2.B;

Question 13

An audit plan of substantive procedures for cash would not include

Accepted Answer

A)  Requesting a cutoff bank statement be mailed to the client. 
B)  Requesting the client to prepare bank reconciliations. 
C)  Preparing a schedule of interbank transfers for a period of 10 business days before and after year-end date. 
D)  Obtaining a written client representation concerning compensating balance agreements. 
A)  Requesting a cutoff bank statement be mailed to the client. 
B)  Requesting the client to prepare bank reconciliations. 
C)  Preparing a schedule of interbank transfers for a period of 10 business days before and after year-end date. 
D)  Obtaining a written client representation concerning compensating balance agreements.

Question 14

The best way to enact a broad fraud-prevention program is to

Accepted Answer

A)  Install airtight control systems of checks and supervision. 
B)  Name an "ethics officer" who is responsible for receiving and acting on fraud tips. 
C)  Place dedicated hot line telephones on walls around the workplace with direct communication to the company ethics officer. 
D)  Practice management "of the people and for the people" to help them share personal and professional problems. 
A)  Install airtight control systems of checks and supervision. 
B)  Name an "ethics officer" who is responsible for receiving and acting on fraud tips. 
C)  Place dedicated hot line telephones on walls around the workplace with direct communication to the company ethics officer. 
D)  Practice management "of the people and for the people" to help them share personal and professional problems.

Question 15

Dual direction testing involves samples selected to obtain evidence about control over _____________________________ in one direction and control over _____________________________ in the other direction.

Accepted Answer

completene

Question 16

The auditors' information source for vouching the bank reconciliation items is the

Accepted Answer

A)  Standard bank confirmation. 
B)  Bank statement at audit date. 
C)  Cutoff bank statement. 
D)  Accounting journal at year end. 
A)  Standard bank confirmation. 
B)  Bank statement at audit date. 
C)  Cutoff bank statement. 
D)  Accounting journal at year end.

Question 17

Control systems enhance trust and reduce the bureaucracy of business.

Accepted Answer

A) True 
 B)False

Question 18

Cash receipts from sales on account have been misappropriated.Which of the following acts would conceal this defalcation and be least likely to be detected by an auditor?

Accepted Answer

A)  Understating the sales journal. 
B)  Overstating the accounts receivable control account. 
C)  Overstating the accounts receivable subsidiary ledger. 
D)  Overstating the sales journal. 
A)  Understating the sales journal. 
B)  Overstating the accounts receivable control account. 
C)  Overstating the accounts receivable subsidiary ledger. 
D)  Overstating the sales journal.

Question 19

An unrecorded check issued during the last week of the year would most likely be discovered by the auditor when the

Accepted Answer

A)  Check register for the last month is reviewed. 
B)  Cutoff bank statement is reconciled. 
C)  Bank confirmation is reviewed. 
D)  Search for unrecorded liabilities is performed. 
A)  Check register for the last month is reviewed. 
B)  Cutoff bank statement is reconciled. 
C)  Bank confirmation is reviewed. 
D)  Search for unrecorded liabilities is performed.

Question 20

Two people should open mail that includes payments.This control is called

Accepted Answer

A)  Separation of duties. 
B)  Joint custody. 
C)  Anti-collusion. 
D)  Lapping. 
A)  Separation of duties. 
B)  Joint custody. 
C)  Anti-collusion. 
D)  Lapping.

The characteristics of people who commit the largest frauds would not include

One of the main requirements under GAAS relating to fraud in a financial statement audit is that auditors obtain evidence about the intent of the persons responsible for the fraud.

A _____________________________ is some pressure experienced by a person who believes that it can't be shared with friends and confidants.

An auditor who discovers that client employees have committed an illegal act that has a material effect on the client's financial statements most likely would withdraw from the engagement if

Employee fraud is an intentional act that injures investors or creditors by leading to materially misleading financial statements.

Which of the following is an effective audit procedure that an auditor might use to detect kiting between intercompany banks?

Which question would not be appropriate when asking questions of personnel during a regular audit?

Which of the following control activities could prevent a paid disbursement voucher from being presented for payment a second time?

Which of the following is least indicative of fraudulent activity?

Fraud awareness auditing includes "thinking like a crook" to imagine ways and means of stealing.

An audit plan of substantive procedures for cash would not include

The best way to enact a broad fraud-prevention program is to

Dual direction testing involves samples selected to obtain evidence about control over _ in one direction and control over _ in the other direction.

The auditors' information source for vouching the bank reconciliation items is the

Control systems enhance trust and reduce the bureaucracy of business.

Cash receipts from sales on account have been misappropriated.Which of the following acts would conceal this defalcation and be least likely to be detected by an auditor?

An unrecorded check issued during the last week of the year would most likely be discovered by the auditor when the

Two people should open mail that includes payments.This control is called

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

The characteristics of people who commit the largest frauds would not include

One of the main requirements under GAAS relating to fraud in a financial statement audit is that auditors obtain evidence about the intent of the persons responsible for the fraud.

A _____________________________ is some pressure experienced by a person who believes that it can't be shared with friends and confidants.

An auditor who discovers that client employees have committed an illegal act that has a material effect on the client's financial statements most likely would withdraw from the engagement if

Employee fraud is an intentional act that injures investors or creditors by leading to materially misleading financial statements.

Which of the following is an effective audit procedure that an auditor might use to detect kiting between intercompany banks?

Which question would not be appropriate when asking questions of personnel during a regular audit?

Which of the following control activities could prevent a paid disbursement voucher from being presented for payment a second time?

Which of the following is least indicative of fraudulent activity?

Fraud awareness auditing includes "thinking like a crook" to imagine ways and means of stealing.

An audit plan of substantive procedures for cash would not include

The best way to enact a broad fraud-prevention program is to

Dual direction testing involves samples selected to obtain evidence about control over _____________________________ in one direction and control over _____________________________ in the other direction.

The auditors' information source for vouching the bank reconciliation items is the

Control systems enhance trust and reduce the bureaucracy of business.

Cash receipts from sales on account have been misappropriated.Which of the following acts would conceal this defalcation and be least likely to be detected by an auditor?

An unrecorded check issued during the last week of the year would most likely be discovered by the auditor when the

Two people should open mail that includes payments.This control is called

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

Dual direction testing involves samples selected to obtain evidence about control over _ in one direction and control over _ in the other direction.