Question 1

Fraud is an intentional act to obtain an unjust or illegal advantage through the use of
deception.

Accepted Answer

A) True 
 B)False

Question 2

Misappropriation of assets fraud involves intentionally misstating items or omitting important
facts from the financial statements.

Accepted Answer

A) True 
 B)False

Question 3

Mathias Mousseau was at a client's offices and was preparing his work for the following day. He was considering the risk that a material misstatement due to significant error or fraud could
Occur in the client's financial statements. Which of the three main stages of the audit was he
Performing?

Accepted Answer

A)  planning stage 
B)  performing stage 
C)  reporting stage 
D)  none of the above 
A)  planning stage 
B)  performing stage 
C)  reporting stage 
D)  none of the above

Question 4

Explain the three main stages of an audit of financial statements.

Accepted Answer

The main stages of an audit are planning

Question 5

Under the going concern assumption, assets are valued on the basis that they will continue to
be used for the purpose of conducting a business.

Accepted Answer

A) True 
 B)False

Question 6

Monica Marcelloni's team has been asked to tackle three ongoing frauds and her partner has asked her to follow up only on the financial reporting fraud. Which of the following items will
She be pursuing?

Accepted Answer

A)  theft of stock by employees or customers 
B)  employees remaining on the payroll after ceasing employment 
C)  recording fictitious sales 
D)  unauthorized refunds to customers 
A)  theft of stock by employees or customers 
B)  employees remaining on the payroll after ceasing employment 
C)  recording fictitious sales 
D)  unauthorized refunds to customers

Question 7

Which of the following is an example of a misappropriation of assets fraud?

Accepted Answer

A)  Unauthorized discounts or refunds to customers 
B)  Inappropriate application of accounting principles 
C)  Unrecorded liabilities 
D)  Improper asset valuations 
A)  Unauthorized discounts or refunds to customers 
B)  Inappropriate application of accounting principles 
C)  Unrecorded liabilities 
D)  Improper asset valuations

Question 8

Auditors must gain an understanding of their client at the outset of every audit.

Accepted Answer

A) True 
 B)False

Question 9

Why must auditors gain an understanding of their client at the start of every audit?

Accepted Answer

The purpose of auditors gaining an under

Question 10

Attitudes and rationalization to justify a fraud include:

Accepted Answer

A)  Significant related party transactions. 
B)  An excessive focus on profit maximization. 
C)  A significant decline in demand for the client's products or services. 
D)  A high volume of transactions close to year-end. 
A)  Significant related party transactions. 
B)  An excessive focus on profit maximization. 
C)  A significant decline in demand for the client's products or services. 
D)  A high volume of transactions close to year-end.

Question 11

Gerry Jones has been asked to review manual or automated procedures that typically operate at a business process level and apply to the processing of transactions by individual
Applications. What kind of controls is Gerry going to be assessing?

Accepted Answer

A)  output controls 
B)  general controls 
C)  a and b 
D)  application controls 
A)  output controls 
B)  general controls 
C)  a and b 
D)  application controls

Question 12

Risks associated with information technology include:

Accepted Answer

A) Loss of data. 
B)  Errors in programs. 
C)  Unauthorized access to computers. 
D)  All of the above. 
A) Loss of data. 
B)  Errors in programs. 
C)  Unauthorized access to computers. 
D)  All of the above.

Question 13

The going concern assumption is made when it is believed that:

Accepted Answer

A)  A company will become insolvent within the next accounting period. 
B)  The board of directors does not believe the company's financial statements are fairly presented. 
C)  A company will remain in business for the foreseeable future. 
D)  A company is a separate legal entity. 
A)  A company will become insolvent within the next accounting period. 
B)  The board of directors does not believe the company's financial statements are fairly presented. 
C)  A company will remain in business for the foreseeable future. 
D)  A company is a separate legal entity.

Question 14

Which of the following statements relating to application controls is correct?

Accepted Answer

A)  They impact on the procedures used for data entry, data processing and output. 
B)  They include procedures for purchasing new computers. 
C)  They are not designed to prevent or detect a material misstatement in the financial statements. 
D)  They include the use of passwords and other security measures to minimize the risk of unauthorized access. 
A)  They impact on the procedures used for data entry, data processing and output. 
B)  They include procedures for purchasing new computers. 
C)  They are not designed to prevent or detect a material misstatement in the financial statements. 
D)  They include the use of passwords and other security measures to minimize the risk of unauthorized access.

Question 15

Mitigating factors that reduce going concern risk include the ability to raise additional funds
through the sale of shares.

Accepted Answer

A) True 
 B)False

Question 16

An auditor is not concerned with transactions and events being recorded in the correct accounting period.

Accepted Answer

A) True 
 B)False

Question 17

Eva Islam, CPA is auditing a company where it is experiencing strikes regularly, has been under investigation with non-compliance with legislation and is falling behind competitors.
What kind of risk is being assessed?

Accepted Answer

A)  fraud risk 
B)  going concern risk 
C)  a and b 
D)  none of the above 
A)  fraud risk 
B)  going concern risk 
C)  a and b 
D)  none of the above

Question 18

What is fraud and what are some of the red flags that can alert auditors to the possibility that a fraud may have occurred?

Accepted Answer

Fraud is an intentional act to obtain an

Question 19

When assessing the risk of fraud, an auditor can consider:

Accepted Answer

A)  Attitudes and rationalization to justify a fraud. 
B)  Incentives and pressures to commit fraud. 
C)  Opportunities to perpetuate a fraud. 
D)  All of the above. 
A)  Attitudes and rationalization to justify a fraud. 
B)  Incentives and pressures to commit fraud. 
C)  Opportunities to perpetuate a fraud. 
D)  All of the above.

Question 20

Which of the following statements regarding the level of demand for the goods sold or services provided by companies is correct?

Accepted Answer

A)  If a client's products or services are seasonal, this will affect revenue flow. 
B)  If a client operates in an industry subject to changing trends, the client does not risk inventory obsolescence. 
C)  If a client's products or services are seasonal, this will not affect revenue flow. 
D)  When a product or process is subject to technological change, there is never a risk that the client will be left behind by its competitors. 
A)  If a client's products or services are seasonal, this will affect revenue flow. 
B)  If a client operates in an industry subject to changing trends, the client does not risk inventory obsolescence. 
C)  If a client's products or services are seasonal, this will not affect revenue flow. 
D)  When a product or process is subject to technological change, there is never a risk that the client will be left behind by its competitors.

Fraud is an intentional act to obtain an unjust or illegal advantage through the use of deception.

Misappropriation of assets fraud involves intentionally misstating items or omitting important facts from the financial statements.

Mathias Mousseau was at a client's offices and was preparing his work for the following day. He was considering the risk that a material misstatement due to significant error or fraud could Occur in the client's financial statements. Which of the three main stages of the audit was he Performing?

Explain the three main stages of an audit of financial statements.

Under the going concern assumption, assets are valued on the basis that they will continue to be used for the purpose of conducting a business.

Monica Marcelloni's team has been asked to tackle three ongoing frauds and her partner has asked her to follow up only on the financial reporting fraud. Which of the following items will She be pursuing?

Which of the following is an example of a misappropriation of assets fraud?

Auditors must gain an understanding of their client at the outset of every audit.

Why must auditors gain an understanding of their client at the start of every audit?

Attitudes and rationalization to justify a fraud include:

Gerry Jones has been asked to review manual or automated procedures that typically operate at a business process level and apply to the processing of transactions by individual Applications. What kind of controls is Gerry going to be assessing?

Risks associated with information technology include:

The going concern assumption is made when it is believed that:

Which of the following statements relating to application controls is correct?

Mitigating factors that reduce going concern risk include the ability to raise additional funds through the sale of shares.

An auditor is not concerned with transactions and events being recorded in the correct accounting period.

Eva Islam, CPA is auditing a company where it is experiencing strikes regularly, has been under investigation with non-compliance with legislation and is falling behind competitors. What kind of risk is being assessed?

What is fraud and what are some of the red flags that can alert auditors to the possibility that a fraud may have occurred?

When assessing the risk of fraud, an auditor can consider:

Which of the following statements regarding the level of demand for the goods sold or services provided by companies is correct?

Introduction and Overview of Audit and Assurance

Ethics, Legal Liability and Client Acceptance

Audit Planning II

Audit Evidence

Sampling and Overview of the Risk Response Phase of the Audit

Gaining an Understanding of the Clients System of Internal Controls

Execution of the Audittesting of Controls

Execution of the Auditperforming Substantive Procedures

Substantive Testing and Balance Sheet Accounts

Substantive Testing and Income Statement Accounts

Completing and Reporting on the Audit

Filters

Exam 3: Audit Planning I

Fraud is an intentional act to obtain an unjust or illegal advantage through the use of deception.

Misappropriation of assets fraud involves intentionally misstating items or omitting important facts from the financial statements.

Mathias Mousseau was at a client's offices and was preparing his work for the following day. He was considering the risk that a material misstatement due to significant error or fraud could Occur in the client's financial statements. Which of the three main stages of the audit was he Performing?

Explain the three main stages of an audit of financial statements.

Under the going concern assumption, assets are valued on the basis that they will continue to be used for the purpose of conducting a business.

Monica Marcelloni's team has been asked to tackle three ongoing frauds and her partner has asked her to follow up only on the financial reporting fraud. Which of the following items will She be pursuing?

Which of the following is an example of a misappropriation of assets fraud?

Auditors must gain an understanding of their client at the outset of every audit.

Why must auditors gain an understanding of their client at the start of every audit?

Attitudes and rationalization to justify a fraud include:

Gerry Jones has been asked to review manual or automated procedures that typically operate at a business process level and apply to the processing of transactions by individual Applications. What kind of controls is Gerry going to be assessing?

Risks associated with information technology include:

The going concern assumption is made when it is believed that:

Which of the following statements relating to application controls is correct?

Mitigating factors that reduce going concern risk include the ability to raise additional funds through the sale of shares.

An auditor is not concerned with transactions and events being recorded in the correct accounting period.

Eva Islam, CPA is auditing a company where it is experiencing strikes regularly, has been under investigation with non-compliance with legislation and is falling behind competitors. What kind of risk is being assessed?

What is fraud and what are some of the red flags that can alert auditors to the possibility that a fraud may have occurred?

When assessing the risk of fraud, an auditor can consider:

Which of the following statements regarding the level of demand for the goods sold or services provided by companies is correct?

Introduction and Overview of Audit and Assurance

Ethics, Legal Liability and Client Acceptance

Audit Planning II

Audit Evidence

Sampling and Overview of the Risk Response Phase of the Audit

Gaining an Understanding of the Clients System of Internal Controls

Execution of the Audittesting of Controls

Execution of the Auditperforming Substantive Procedures

Substantive Testing and Balance Sheet Accounts

Substantive Testing and Income Statement Accounts

Completing and Reporting on the Audit

Filters