Question 1

Auditor responses to fraud risks include which of the following?

Accepted Answer

The answer of Auditor responses to fraud risks include which...

Question 2

Internal control reports issued by public companies must identify the framework used to evaluate the effectiveness of internal control. Which of the following is the most common framework in the U.S.?

Accepted Answer

A)  Enterprise Internal Control - COSO. 
B)  Effective Internal Control Framework - AICPA. 
C)  Enterprise Internal Control - AICPA. 
D)  Internal Control - Integrated Framework - COSO.

Question 3

The auditor's consideration of a private company's internal control is:

Accepted Answer

A)  recommended by most capital market authorities. 
B)  required by ISA 315. 
C)  required by IFAC's Code of Ethics. 
D)  required by IFRS.

Question 4

In the audit of a private company, an auditor will test controls when control risk is initially assessed at:

Accepted Answer

The answer of In the audit of a private company,...

Question 5

Knowledge of both general and application controls is not particularly crucial for auditors of public companies.

Accepted Answer

A) True 
 B)False

Question 6

________ involves deliberate actions taken by management to meet earnings objectives.

Accepted Answer

A)  Expenditure management 
B)  Earnings management 
C)  Top- line management 
D)  Management- by- objective

Question 7

Which of the following is not a general control?

Accepted Answer

A)  Hardware controls. 
B)  The plan of organization and operation of IT activity. 
C)  Processing controls. 
D)  Procedures for documenting, reviewing, and approving systems and programs.

Question 8

Sources of information gathered to assess fraud risks usually do not include:

Accepted Answer

A)  review of memorandum and articles of association. 
B)  communication among audit team members. 
C)  analytical procedures. 
D)  inquiries of management.

Question 9

The initial presumption in the audit of a public company is that control risk is:

Accepted Answer

A)  moderate. 
B)  low. 
C)  high. 
D)  low or moderate, but not high.

Question 10

ISAs 240 and 315 does not specifically indicate which members of an audit engagement team must attend a brainstorming session.

Accepted Answer

A) True 
 B)False

Question 11

Match each of the definition with the following terms
-Management's ongoing and periodic assessment of the quality of internal control performance to determine that controls are operating as intended and modified when needed.

Accepted Answer

A)  Control environment 
B)  Control activities 
C)  Independent checks on performance 
D)  Internal control 
E)  Monitoring
F) Separation of duties
G) General authorization
H) Specific authorization
I) Risk assessment

Question 12

What matters related to their consideration of fraud must auditors document according to ISA 230?

Accepted Answer

The answer of What matters related to their consideration of...

Question 13

Which of the following is a category of fraud?

Accepted Answer

The answer of Which of the following is a category...

Question 14

With respect to fraudulent financial reporting, most frauds involve:

Accepted Answer

The answer of With respect to fraudulent financial reporting, most...

Question 15

________ link equipment in large geographic regions.

Accepted Answer

A)  Local area networks (LANs) 
B)  Wide area networks (WANs) 
C)  Cosmopolitan area networks (CANs) 
D)  Virtual area networks (VANs)

Question 16

List and briefly describe the three conditions for fraud arising from fraudulent financial reporting and misappropriation of assets as described in ISAs 240, 315 and 450.

Accepted Answer

The answer of List and briefly describe the three conditions...

Question 17

Fraudulent financial reporting may be accomplished through the manipulation of:

Accepted Answer

A)  liabilities. 
B)  revenues. 
C)  assets. 
D)  all of the above

Question 18

Management is responsible for:

Accepted Answer

The answer of Management is responsible for: ...

Question 19

Which of the following factors may increase risks to an organization?

Accepted Answer

The answer of Which of the following factors may increase...

Question 20

Which of the following is not a category of an application control?

Accepted Answer

A)  Processing controls. 
B)  Input controls. 
C)  Hardware controls. 
D)  Output controls.

Exam 4: Internal Control, Control Risk, Section 404 Audits, Fraud Auditing, and the Impact of Information Technology on the Audit Process