Question 1

The Groupon case deals with all but the following issues?

Accepted Answer

A)  Improperly estimated customer returns 
B)  Improper recognition of gross revenue 
C)  Used a new innovative metric of "Adjusted Consolidated Segment Operating Income" 
D)  Blamed material weakness on their auditors EY 
A)  Improperly estimated customer returns 
B)  Improper recognition of gross revenue 
C)  Used a new innovative metric of "Adjusted Consolidated Segment Operating Income" 
D)  Blamed material weakness on their auditors EY

Question 2

Which of the following is not part of the fraud triangle?

Accepted Answer

A)  Incentives 
B)  Opportunity 
C)  Materiality 
D)  Rationalization 
A)  Incentives 
B)  Opportunity 
C)  Materiality 
D)  Rationalization

Question 3

Why is materiality one of the most difficult judgments to make in auditing financial statements?

Accepted Answer

The answer of Why is materiality one of the most...

Question 4

Internal controls, an internal audit function, and an audit committee are all elements of a strong corporate governance system. How should an external auditor evaluate these elements in making a risk assessment? What are the ethical signs that each system is operating as intended?

Accepted Answer

The internal audit function should be an

Question 5

Management's attitude toward aggressive financial statement reporting and its emphasis on meeting projected profit numbers would significantly influence an entity's control environment when

Accepted Answer

A)  Internal auditors report to the audit committee 
B)  The audit committee is active in overseeing the entity's financial reporting 
C)  Management is dominated by one shareholder with little other governance 
D)  Management does not have a stock option plan 
A)  Internal auditors report to the audit committee 
B)  The audit committee is active in overseeing the entity's financial reporting 
C)  Management is dominated by one shareholder with little other governance 
D)  Management does not have a stock option plan

Question 6

Auditors are responsible to detect and correct errors when they are:

Accepted Answer

A)  Material 
B)  Material or immaterial 
C)  Due to an illegal act 
D)  Management fails to correct for the error 
A)  Material 
B)  Material or immaterial 
C)  Due to an illegal act 
D)  Management fails to correct for the error

Question 7

Typically, when a going concern issue exists the auditor should:

Accepted Answer

A)  Issue an unmodified opinion with an emphasis-of-matter paragraph 
B)  Explain the reasons for the going concern issue 
C)  Indicate where management's plans to deal with the going concern are addressed 
D)  All of these 
A)  Issue an unmodified opinion with an emphasis-of-matter paragraph 
B)  Explain the reasons for the going concern issue 
C)  Indicate where management's plans to deal with the going concern are addressed 
D)  All of these

Question 8

A study conducted of financial statement restatements during the period of 2007 through 2009 indicated a decline in the number of restatements that were attributed to each of the following except for:

Accepted Answer

A)  Improved audits of financial statements 
B)  Improved reliability of internal controls 
C)  A more relaxed approach of the SEC regarding materiality and the need to file restatements 
D)  Companies making and reporting fewer mistakes or catching fewer mistakes 
A)  Improved audits of financial statements 
B)  Improved reliability of internal controls 
C)  A more relaxed approach of the SEC regarding materiality and the need to file restatements 
D)  Companies making and reporting fewer mistakes or catching fewer mistakes

Question 9

The Dunco Industries case deals with issues related to:

Accepted Answer

A)  The timing of revenue recognition and shipping date of merchandise 
B)  The timing of revenue recognition and delivery date of merchandise 
C)  The timing of expense recognition on accrual accounts 
D)  Manual entries after the quarter's close that lacked sufficient supporting documentation 
A)  The timing of revenue recognition and shipping date of merchandise 
B)  The timing of revenue recognition and delivery date of merchandise 
C)  The timing of expense recognition on accrual accounts 
D)  Manual entries after the quarter's close that lacked sufficient supporting documentation

Question 10

All of the following tend to be rationalizations for fraud except for:

Accepted Answer

A)  We need to protect the shareholders and keep the stock price high 
B)  All companies use aggressive accounting techniques 
C)  The employee will be fired unless s/he goes along with the fraud 
D)  We are correcting a temporary problem that will not exist in the future 
A)  We need to protect the shareholders and keep the stock price high 
B)  All companies use aggressive accounting techniques 
C)  The employee will be fired unless s/he goes along with the fraud 
D)  We are correcting a temporary problem that will not exist in the future

Question 11

In the ZZZZ best case, Barry Minkow was sentenced to 5 years for his involvement in

Accepted Answer

A)  A fraudulent insurance restoration scam 
B)  Insider trading on Lennar stock 
C)  Stealing from a San Diego church 
D)  Overcharging a LA housewife for carpet cleaning services 
A)  A fraudulent insurance restoration scam 
B)  Insider trading on Lennar stock 
C)  Stealing from a San Diego church 
D)  Overcharging a LA housewife for carpet cleaning services

Question 12

Which of the following is not correct about materiality?

Accepted Answer

A)  The concept of materiality recognizes that some matters are more important for fair presentation of financial statements 
B)  Materiality judgments are made in light of surrounding circumstances and necessarily involve quantitative and qualitative judgments 
C)  Materiality should be predictable from audit to audit so that the readers of financial statements know what constitutes materiality 
D)  An auditor's consideration of materiality is influenced by the auditor's perception of the need of the readers of the financial statements 
A)  The concept of materiality recognizes that some matters are more important for fair presentation of financial statements 
B)  Materiality judgments are made in light of surrounding circumstances and necessarily involve quantitative and qualitative judgments 
C)  Materiality should be predictable from audit to audit so that the readers of financial statements know what constitutes materiality 
D)  An auditor's consideration of materiality is influenced by the auditor's perception of the need of the readers of the financial statements

Question 13

The difference between an error in the financial statements as compared to fraud is:

Accepted Answer

A)  An error is always an intentional act designed to deceive another party 
B)  Fraud is always an intentional act designed to deceive another party 
C)  An error always leads to a qualification of the auditors' opinion 
D)  Fraudulent financial reporting is always material in amount 
A)  An error is always an intentional act designed to deceive another party 
B)  Fraud is always an intentional act designed to deceive another party 
C)  An error always leads to a qualification of the auditors' opinion 
D)  Fraudulent financial reporting is always material in amount

Question 14

Susie is an auditor with XYZ Audit firm. The Senior Audit member has told her that all fieldwork must be completed by the end of the week. Susie knows that corners have been cut and certain tests not completed due to the time constraints. The integrity of the firm could be compromised. What should Susie do?

Accepted Answer

A)  Do nothing. 
B)  Talk with the chain of command of the client to see that her concerns are dealt with. 
C)  Follow the chain of command of XYZ to see that her concerns are dealt with. 
D)  Talk with a reporter from the Wall Street Journal. 
A)  Do nothing. 
B)  Talk with the chain of command of the client to see that her concerns are dealt with. 
C)  Follow the chain of command of XYZ to see that her concerns are dealt with. 
D)  Talk with a reporter from the Wall Street Journal.

Question 15

The first step for an auditor who concludes an illegal act exists is to:

Accepted Answer

A)  Bring the matter to the attention of the audit committee 
B)  Bring the matter to the attention of the SEC 
C)  Assess the impact of the illegal act on the financial statements 
D)  Assess the impact of the illegal act on the auditor's opinion 
A)  Bring the matter to the attention of the audit committee 
B)  Bring the matter to the attention of the SEC 
C)  Assess the impact of the illegal act on the financial statements 
D)  Assess the impact of the illegal act on the auditor's opinion

Question 16

The auditor's responsibility with regard to illegal acts is greatest when:

Accepted Answer

A)  The illegal acts have an indirect and material effect on financial statement amounts 
B)  The illegal acts have a direct and material effect on financial statement amounts 
C)  The illegal acts have a direct and immaterial effect on financial statement amounts 
D)  Illegal acts exist regardless of the effects on the financial statements 
A)  The illegal acts have an indirect and material effect on financial statement amounts 
B)  The illegal acts have a direct and material effect on financial statement amounts 
C)  The illegal acts have a direct and immaterial effect on financial statement amounts 
D)  Illegal acts exist regardless of the effects on the financial statements

Question 17

The framework of COSO Enterprise Risk Management is to

Accepted Answer

A)  Incorporate enhanced internal control principles into enhanced corporate governance 
B)  Incorporate enhanced audit sampling procedures in the testing of internal controls 
C)  Incorporate enhanced corporate governance into internal control principles 
D)  Incorporate enhanced audit sampling procedures in substantive testing 
A)  Incorporate enhanced internal control principles into enhanced corporate governance 
B)  Incorporate enhanced audit sampling procedures in the testing of internal controls 
C)  Incorporate enhanced corporate governance into internal control principles 
D)  Incorporate enhanced audit sampling procedures in substantive testing

Question 18

Which of the following summarizes the essence of field work standards of GAAS?

Accepted Answer

A)  Quality of professionals that perform an audit 
B)  Criteria for judging the quality of audit work 
C)  Whether the auditor was independent in conducting the audit 
D)  Whether the auditor reviewed the client's financial statements for adherence to GAAP 
A)  Quality of professionals that perform an audit 
B)  Criteria for judging the quality of audit work 
C)  Whether the auditor was independent in conducting the audit 
D)  Whether the auditor reviewed the client's financial statements for adherence to GAAP

The Groupon case deals with all but the following issues?

Which of the following is not part of the fraud triangle?

Why is materiality one of the most difficult judgments to make in auditing financial statements?

Internal controls, an internal audit function, and an audit committee are all elements of a strong corporate governance system. How should an external auditor evaluate these elements in making a risk assessment? What are the ethical signs that each system is operating as intended?

Management's attitude toward aggressive financial statement reporting and its emphasis on meeting projected profit numbers would significantly influence an entity's control environment when

Auditors are responsible to detect and correct errors when they are:

Typically, when a going concern issue exists the auditor should:

A study conducted of financial statement restatements during the period of 2007 through 2009 indicated a decline in the number of restatements that were attributed to each of the following except for:

The Dunco Industries case deals with issues related to:

All of the following tend to be rationalizations for fraud except for:

In the ZZZZ best case, Barry Minkow was sentenced to 5 years for his involvement in

Which of the following is not correct about materiality?

The difference between an error in the financial statements as compared to fraud is:

The first step for an auditor who concludes an illegal act exists is to:

The auditor's responsibility with regard to illegal acts is greatest when:

The framework of COSO Enterprise Risk Management is to

Which of the following summarizes the essence of field work standards of GAAS?

Ethical Reasoning: Implications for Accounting

Cognitive Processes and Ethical Decision Making in Accounting

Creating an Ethical Organization Environment and Effective Corporate Governance Systems

Aicpa Code of Professional Conduct

Legal, Regulatory, and Professional Obligations of Auditors

Earnings Management and the Quality of Financial Reporting

International Financial Reporting: Ethics and Corporate Governance Considerations

Filters

Exam 5: Fraud in Financial Statements and Auditor Responsibilities

The Groupon case deals with all but the following issues?

Which of the following is not part of the fraud triangle?

Why is materiality one of the most difficult judgments to make in auditing financial statements?

Internal controls, an internal audit function, and an audit committee are all elements of a strong corporate governance system. How should an external auditor evaluate these elements in making a risk assessment? What are the ethical signs that each system is operating as intended?

Management's attitude toward aggressive financial statement reporting and its emphasis on meeting projected profit numbers would significantly influence an entity's control environment when

Auditors are responsible to detect and correct errors when they are:

Typically, when a going concern issue exists the auditor should:

A study conducted of financial statement restatements during the period of 2007 through 2009 indicated a decline in the number of restatements that were attributed to each of the following except for:

The Dunco Industries case deals with issues related to:

All of the following tend to be rationalizations for fraud except for:

In the ZZZZ best case, Barry Minkow was sentenced to 5 years for his involvement in

Which of the following is not correct about materiality?

The difference between an error in the financial statements as compared to fraud is:

The first step for an auditor who concludes an illegal act exists is to:

The auditor's responsibility with regard to illegal acts is greatest when:

The framework of COSO Enterprise Risk Management is to

Which of the following summarizes the essence of field work standards of GAAS?

Ethical Reasoning: Implications for Accounting

Cognitive Processes and Ethical Decision Making in Accounting

Creating an Ethical Organization Environment and Effective Corporate Governance Systems

Aicpa Code of Professional Conduct

Legal, Regulatory, and Professional Obligations of Auditors

Earnings Management and the Quality of Financial Reporting

International Financial Reporting: Ethics and Corporate Governance Considerations

Filters