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

Audit committees of publicly traded companies must establish whistleblowing mechanisms within the company.

Which of the following actions was a key element of the Enron audit fraud?

Which of the following is a responsibility of the PCAOB?

Rationalization involves the mindset of the fraudster to justify committing the fraud.

The fraud triangle has three elements.Which of the elements must be present for a fraud to occur?

An audit must be performed by persons who can make sound judgments relating to complex accounting issues.

Various ways by which fraud could be perpetrated should be hypothesized by the auditor prior to conducting audit testing.

Related-party transactions provide management certain opportunities to manipulate financial statements.

Fraud detection procedures should only be performed for clients that have had fraud problems in the past.

When fraud risk is great in the organization under audit,procedures applied are likely to be more extensive.

Which of the following is a NYSE mandated guideline for corporate governance?

Which of the following is not an element of the fraud triangle?

Who is responsible for operating an enterprise?

According to professional auditing standards,which of the following best represents a type of fraudulent financial reporting?

The auditor can be satisfied with less than persuasive evidence in the audit process because of the belief that management is honest.

Which of the following is a specific corporate governance responsibility of executive management?

Sam Jones,controller of Mitnikco,spends three days researching the accounting standards to find loopholes in the "rules" and to make a case for recognizing revenue earlier,rather than in later years.In the end,Sam and the other members of management determine that they will reduce the company's deferred revenue accounts and begin accounting for all revenues as agreements are signed.Based solely on the preceding information,which element of fraud is represented by the actions of Mitnikco management?

Managers of organizations are hired by boards of directors to perform responsibilities such as the implementation of internal control.

The Sarbanes-Oxley Act established the PCAOB,which is an agency of the U.S.government funded by taxpayers.

Transparency is a desirable,but not critical,element of effective corporate governance.