Exam 5: Fraud in Financial Statements and Auditor Responsibilities

PCAOB Auditing Standard No.4 requires that the external auditors should take each of the following steps when reporting on whether a material weakness still exists in the internal controls except for:

What are the audit committee's responsibilities with respect to fraud and risk assessment? How do such responsibilities relate to the communication that should take place between the external auditor and audit committee?

Kohlberg's model addresses the stages of moral development a person might move through in developing a strong sense of ethics. Analyze each of those stages with respect to the three elements of the fraud triangle. How can an individual resist the temptation to become involve in fraud by possessing the characteristics of behavior included in each stage?

An auditor concludes that a client has committed an illegal act that has not been properly accounted for or disclosed. The auditor should withdraw from the engagement if the

Adverse opinions are preceded by a separate paragraph that should meet all of the following except for:

Explain each of the three sides of the fraud triangle with respect to how it contributes toward the possibility that fraud in the financial statements may be present. Are there differences with respect to how each element might influence occupational fraud and fraudulent financial statements? Explain.

Larry is the controller of ABC Industries and has a difference of opinion on an accounting matter with the CFO. Larry is told that the very survival of the company depends on his going along with the proposed accounting treatment that has been approved by the CEO and increases earnings 20 percent above what Larry believes it should be. If Larry goes along with the CFO, he is reasoning at what stage in Kohlberg's model:

Some critics claim the usefulness of the audit report is limited because:

Describe the steps that auditors should take under Auditing Standard No. 4 of the PCAOB to report on whether a previously reported material weakness still exists.

An ethical dilemma for professional accountants is when a conflict exists between each of the following except for:

The misappropriation of assets refers to:

The primary accounting issue in the Royal Ahold case is:

Professional skepticism is considered to be a critical element of conducting an audit. Describe the elements of professional skepticism and how it relates to carrying out an audit in accordance with GAAS.

If a company is seeking out views of different accounting firms until they find one with a desired accounting treatment, it would be called _____.

The fraud at Tyco included each of the following acts except for:

Which of the following is not true of "reasonable assurance"?

In which of the following circumstances would a qualified opinion be appropriate?

In the Tyco fraud the corporate governance system completely broke down. Explain the failings in the corporate governance system at Tyco and how the Sarbanes-Oxley Act addresses those failings.

Which of the following is not a consideration in determining a measure of materiality?

The Audit Client Consideration case deals with issues related to: