Exam 2: The Auditors Responsibilities Regarding Fraud and Mechanisms to Address Fraud: Regulation and Corporate Governance

The landmark Enron fraud in the early 2000's involved the movement of significant debt off the books to related,unconsolidated entities.

Which action was a key element in the Wells Fargo fraud case?

Elements of Fraud Research consistently shows that there are three elements associated with most frauds.List these elements and at least three indicators that the element may exist for a particular company.

How often does the PCAOB inspect registered accounting firms that audit fewer than 100 issuers?

Fraudulent financial reporting What are three common ways in which fraudulent financial reporting takes place?

During the time period 1998 to 2007,the median size of the public company perpetrating fraud rose tenfold to $100 million (as compared to the previous ten years).

Who is most often involved in perpetrating fraudulent financial reporting?

Which of the following best describes the audit committee's oversight responsibility?

According to professional audit standards,how might auditors gain an understanding of the nature of fraud that may occur in the client organization?

What is the primary determinant in the difference between fraud and errors in financial statement reporting?

Audit procedures to detect fraud are generally an expansion of normal audit procedures.

Fraud consideration by auditors John Beasley is interviewing with public audit firms to become an auditor.John does not believe that fraud is a "big deal" in client organizations and argues that most individuals in management of companies are "honest people." He believes that auditors are becoming too cynical. Describe your response to John's attitude and discuss the major types of fraud that occur in companies.

If an auditor discovers evidence of fraud,the planned audit procedures should be adjusted accordingly.

What should an audit team do when it discovers that fraud risk factors are present on an audit engagement?

Auditors need to consider fraud arising from misappropriation of assets and fraudulent financial reporting.

Under the Sarbanes-Oxley Act,which of the following services performed by registered accounting firms for their audit clients would not impair their independence?

Asset misappropriations are the primary fraud scheme in small businesses,and the perpetrators are usually the owners.

Which of the following best represents actions that may indicate fraud is pervasive throughout the company under audit?

Which of the following is a stated principle of a NYSE report identifying key core governance principles?

What is the best way an auditor can detect fraud in the financial statements?