acc309 Fraud Audit

89問 • 1年前

問題一覧

Which of the following best defines fraud in a financial statement auditing context?

Fraud is an intentional misstatement of the financial statements.

Companies may intentionally understate earnings when income is high to create ________ that may be used in future years to increase earnings.

cookie jar reserves

Most cases of fraudulent reporting involve

an overstatement of income.

________ is fraud that involves theft of an entity's assets.

Misappropriation of assets

Which of the following is a form of earnings management in which revenues and expenses are shifted between periods to reduce fluctuations in earnings?

income smoothing

Misappropriation of assets is normally perpetrated by

employees at lower levels of the organization.

Fraudulent financial reporting

can involve understating net income in order to reduce income taxes.

According to the Association of Certified Fraud Examiners, the average company loses ________ percent of its revenues to fraud.

five

Which of the following is an accurate statement regarding the misappropriation of assets?

Misappropriation of assets can easily increase in size over time and can lead to significant reputational harm.

Fraudulent financial reporting is an intentional misstatement or omission of amounts or disclosures with the intent to deceive users.

TRUE

The two main categories of fraud are fraudulent financial reporting and misappropriation of assets.

TRUE

"Cookie jar reserves" are often created by companies whenever their earnings are low to create reserves for future periods when earnings need to be "boosted" upward.

FALSE

Misappropriation of assets is normally perpetrated at the lowest levels of the organization hierarchy.

TRUE

Fraudulent financial reporting usually involves manipulation of amounts rather than disclosures.

TRUE

According to the Association of Certified Fraud Examiners, losses from misappropriation schemes are higher than losses from financial statement frauds.

FALSE

Although the financial statements of all companies are potentially subject to manipulation, the risk is greater for companies that

have to make significant judgments for accounting estimates.

Which of the following is not a factor that relates to opportunities to commit fraudulent financial reporting?

management's set of ethical values

Fraud is more prevalent in smaller businesses and not-for-profit organizations because it is more difficult for them to maintain

adequate separation of duties.

Which of the following is a factor that relates to incentives or pressures to commit fraudulent financial reporting?

excessive pressure for management to meet debt repayment requirements

Which of the following is a factor that relates to attitudes or rationalization to misappropriate assets?

a sense of superiority by executives

Which of the following is not a factor that relates to opportunities to misappropriate assets?

adverse relationships between management and employees

Which of the following is a factor that relates to incentives/pressures to misappropriate assets?

significant personal financial obligations

According to a KPMG survey, most fraud perpetrators

have worked for the company for over ten years.

In the fraud triangle, fraudulent financial reporting and misappropriation of assets

share the same three conditions of the fraud triangle.

Which of the following would the auditor be most concerned about regarding a heightened risk of intentional misstatement?

Senior management emphasizes that it is very important to beat analyst estimates of earnings every reporting period.

Which of the following is a risk factor related to opportunities and financial statement fraud?

significant related-party transactions

Relating to opportunities, why do most people commit fraud?

There are weak internal controls.

Fraud is more prevalent in large businesses than small businesses and not-for-profit organizations.

FALSE

Turnover in accounting personnel can create a rationalization for misstatement.

FALSE

A lack of controls over payments to vendors can cause revenue fraud.

FALSE

Ineffective oversight by the board of directors over financial reporting is an example of an incentives/pressures risk factor.

FALSE

A common incentive for companies to manipulate financial statements is a decline in the company's financial prospects.

TRUE

A common incentive for companies to manipulate financial statements is a decline in the company's financial prospects.

TRUE

The pressure to do "whatever it takes" to meet goals is one of the main reasons why financial statement fraud occurs.

TRUE

In the fraud triangle, fraudulent financial reporting and misappropriation of assets share the same conditions and risk factors.

FALSE

Which of the following is true statement regarding professional skepticism?

Auditors reject most potential clients perceived as lacking honesty and integrity.

Upon discovering information that indicates a material misstatement due to fraud may have occurred, auditors should

all of the above

Which of the following questions is the auditor not required to ask company management when assessing fraud risk?

Is management using all assets effectively?

When assessing the risk for fraud, the auditor must be cognizant of the fact that

analytical procedures must be performed on revenue accounts.

Which of the following is not a likely source of information to assess fraud risks?

consideration of fraud risks discovered during recent audits of other clients

When assessing fraud risk,

the auditor's assessment of fraud risk should be ongoing throughout the audit.

Information and idea exchange sessions by the audit team are required by current auditing standards.

TRUE

Upon discovering information that indicates a material misstatement due to fraud, the auditor must assume that the misstatement is an isolated incident.

FALSE

The presence of fraud risk factors increases the likelihood of fraud and may suggest that fraud is being perpetrated.

TRUE

When the auditor receives inconsistent responses from management and others within the organization, the auditor should obtain additional audit evidence to resolve the inconsistency.

TRUE

Auditing standards require that the auditor presume that there is a risk of fraud in revenue recognition.

TRUE

For significant risks, including fraud risks, the auditor should obtain an understanding of the internal controls related to the risks.

TRUE

Which of the following is the best reason for management to emphasize fraud prevention and deterrence?

It is often more effective and economical for companies to focus on fraud prevention and deterrence rather than on fraud detection.

Which of the following parties is responsible for implementing internal controls to minimize the likelihood of fraud?

management

Research indicates that the most effective way to prevent and deter fraud is to

implement programs and controls that are based on core values embraced by the company.

Fraud awareness training should be

specifically related to the employee's job responsibility.

Which of the following is not one of the elements to prevent, deter, and detect fraud according to the AICPA?

performing analytical procedures

Who is responsible for setting the "tone at the top"?

management

An effective code of conduct should contain the company's policies regarding

all of the above.

Management and the board of directors are responsible for setting the "tone at the top."

TRUE

If employees have positive feelings about their employers, they are less likely to commit fraud.

TRUE

Management must recognize that almost any employee is capable of committing a dishonest act under the right circumstances.

TRUE

Audit committee oversight also serves as a deterrent to fraud by senior management.

TRUE

Auditors may identify conditions during fieldwork that change or support a judgment about the initial assessment of fraud risks. Which of the following is not a condition which should alert an auditor that the initial assessment should be changed?

The subsidiary ledger agrees with the general ledger.

When the auditor identifies risk at the assertion level,

A) the auditor may need to obtain audit evidence that is more reliable and relevant.

Because fraud perpetrators are often knowledgeable about audit procedures, auditors should incorporate unpredictability into the audit plan.

TRUE

The auditors should pay careful attention to accounting principles that involve subjective measurements or complex transactions.

TRUE

Auditing standards specifically require auditors to identify ________ as a fraud risk in most audits.

revenue recognition

Company management is often under pressure to increase revenue and/or net income. One approach is to use a "bill and hold" arrangement. This is an example of which of the following?

premature revenue recognized

Analytical procedures can be very effective in detecting inventory fraud. Which of the following analytical procedures would not be useful in detecting fraud?

accounts receivable turnover

When dealing with revenue frauds,

side agreements can modify the terms of the sales transaction and should be analyzed

Two of the most useful warning signals that can indicate that revenue fraud is occurring are

analytical procedures and documentary discrepancies.

Fictitious revenues

lower accounts receivable turnover.

Which of the following is a correct statement regarding the misappropriation of receipts involving revenue?

If a customer's payment is stolen, regular billing of unpaid accounts can uncover the fraud unless the fraud perpetrator does something to hide the theft.

When analyzing accounts for fraud risk,

payroll is rarely a significant risk for fraudulent financial reporting.

When dealing with fraudulent financial reporting risk for accounts payable,

companies have used fictitious reductions to accounts payable to overstate net income.

Which of the following is an accurate statement regarding assets and fraud risk?

Companies will often capitalize repairs as fixed assets.

When the allowance for doubtful accounts is understated, bad debt expense is understated and net income is also understated.

FALSE

Fictitious revenue transactions have the same level of documentary evidence as legitimate transactions.

FALSE

Auditors should rely on original, rather than duplicate, copies of documents.

TRUE

The two most common areas of fraud in payroll are the creation of fictitious employees and the overstatement of individual payroll hours.

TRUE

To address heightened risks of fraud, the auditor can do all of the following except

decrease the amount of substantive tests.

Which of the following is least likely to uncover fraud?

external auditors

Which of the following is not a category of inquiry used by auditors?

declarative inquiry

________ inquiry is used to obtain information about facts and details that the auditor does not have, usually about past or current events or processes.

Informational

An auditor uses ________ inquiry to corroborate or contradict prior information.

assessment

When the auditor suspects that fraud may be present, auditing standards require the auditor to

obtain additional evidence to determine whether material fraud has occurred.

With whom should the auditor communicate whenever he or she determines that senior management fraud may be present, even if the matter might be considered inconsequential?

audit committee

Most frauds are detected by

a tip

The auditor has a responsibility to notify law enforcement when fraud is suspected.

FALSE

Most frauds are discovered by accident.

FALSE

Auditors may expand other substantive procedures to address the heightened risks of fraud.

TRUE

If auditors determine that there is not a significant risk of material improper revenue recognition, no documentation of this decision is required.

FALSE

Auditing standards require that auditors document

results of the procedures performed to address the risk of management override of controls.

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問題一覧

Which of the following best defines fraud in a financial statement auditing context?

Fraud is an intentional misstatement of the financial statements.

Companies may intentionally understate earnings when income is high to create ________ that may be used in future years to increase earnings.

cookie jar reserves

Most cases of fraudulent reporting involve

an overstatement of income.

________ is fraud that involves theft of an entity's assets.

Misappropriation of assets

Which of the following is a form of earnings management in which revenues and expenses are shifted between periods to reduce fluctuations in earnings?

income smoothing

Misappropriation of assets is normally perpetrated by

employees at lower levels of the organization.

Fraudulent financial reporting

can involve understating net income in order to reduce income taxes.

According to the Association of Certified Fraud Examiners, the average company loses ________ percent of its revenues to fraud.

five

Which of the following is an accurate statement regarding the misappropriation of assets?

Misappropriation of assets can easily increase in size over time and can lead to significant reputational harm.

Fraudulent financial reporting is an intentional misstatement or omission of amounts or disclosures with the intent to deceive users.

TRUE

The two main categories of fraud are fraudulent financial reporting and misappropriation of assets.

TRUE

"Cookie jar reserves" are often created by companies whenever their earnings are low to create reserves for future periods when earnings need to be "boosted" upward.

FALSE

Misappropriation of assets is normally perpetrated at the lowest levels of the organization hierarchy.

TRUE

Fraudulent financial reporting usually involves manipulation of amounts rather than disclosures.

TRUE

According to the Association of Certified Fraud Examiners, losses from misappropriation schemes are higher than losses from financial statement frauds.

FALSE

Although the financial statements of all companies are potentially subject to manipulation, the risk is greater for companies that

have to make significant judgments for accounting estimates.

Which of the following is not a factor that relates to opportunities to commit fraudulent financial reporting?

management's set of ethical values

Fraud is more prevalent in smaller businesses and not-for-profit organizations because it is more difficult for them to maintain

adequate separation of duties.

Which of the following is a factor that relates to incentives or pressures to commit fraudulent financial reporting?

excessive pressure for management to meet debt repayment requirements

Which of the following is a factor that relates to attitudes or rationalization to misappropriate assets?

a sense of superiority by executives

Which of the following is not a factor that relates to opportunities to misappropriate assets?

adverse relationships between management and employees

Which of the following is a factor that relates to incentives/pressures to misappropriate assets?

significant personal financial obligations

According to a KPMG survey, most fraud perpetrators

have worked for the company for over ten years.

In the fraud triangle, fraudulent financial reporting and misappropriation of assets

share the same three conditions of the fraud triangle.

Which of the following would the auditor be most concerned about regarding a heightened risk of intentional misstatement?

Senior management emphasizes that it is very important to beat analyst estimates of earnings every reporting period.

Which of the following is a risk factor related to opportunities and financial statement fraud?

significant related-party transactions

Relating to opportunities, why do most people commit fraud?

There are weak internal controls.

Fraud is more prevalent in large businesses than small businesses and not-for-profit organizations.

FALSE

Turnover in accounting personnel can create a rationalization for misstatement.

FALSE

A lack of controls over payments to vendors can cause revenue fraud.

FALSE

Ineffective oversight by the board of directors over financial reporting is an example of an incentives/pressures risk factor.

FALSE

A common incentive for companies to manipulate financial statements is a decline in the company's financial prospects.

TRUE

A common incentive for companies to manipulate financial statements is a decline in the company's financial prospects.

TRUE

The pressure to do "whatever it takes" to meet goals is one of the main reasons why financial statement fraud occurs.

TRUE

In the fraud triangle, fraudulent financial reporting and misappropriation of assets share the same conditions and risk factors.

FALSE

Which of the following is true statement regarding professional skepticism?

Auditors reject most potential clients perceived as lacking honesty and integrity.

Upon discovering information that indicates a material misstatement due to fraud may have occurred, auditors should

all of the above

Which of the following questions is the auditor not required to ask company management when assessing fraud risk?

Is management using all assets effectively?

When assessing the risk for fraud, the auditor must be cognizant of the fact that

analytical procedures must be performed on revenue accounts.

Which of the following is not a likely source of information to assess fraud risks?

consideration of fraud risks discovered during recent audits of other clients

When assessing fraud risk,

the auditor's assessment of fraud risk should be ongoing throughout the audit.

Information and idea exchange sessions by the audit team are required by current auditing standards.

TRUE

Upon discovering information that indicates a material misstatement due to fraud, the auditor must assume that the misstatement is an isolated incident.

FALSE

The presence of fraud risk factors increases the likelihood of fraud and may suggest that fraud is being perpetrated.

TRUE

When the auditor receives inconsistent responses from management and others within the organization, the auditor should obtain additional audit evidence to resolve the inconsistency.

TRUE

Auditing standards require that the auditor presume that there is a risk of fraud in revenue recognition.

TRUE

For significant risks, including fraud risks, the auditor should obtain an understanding of the internal controls related to the risks.

TRUE

Which of the following is the best reason for management to emphasize fraud prevention and deterrence?

It is often more effective and economical for companies to focus on fraud prevention and deterrence rather than on fraud detection.

Which of the following parties is responsible for implementing internal controls to minimize the likelihood of fraud?

management

Research indicates that the most effective way to prevent and deter fraud is to

implement programs and controls that are based on core values embraced by the company.

Fraud awareness training should be

specifically related to the employee's job responsibility.

Which of the following is not one of the elements to prevent, deter, and detect fraud according to the AICPA?

performing analytical procedures

Who is responsible for setting the "tone at the top"?

management

An effective code of conduct should contain the company's policies regarding

all of the above.

Management and the board of directors are responsible for setting the "tone at the top."

TRUE

If employees have positive feelings about their employers, they are less likely to commit fraud.

TRUE

Management must recognize that almost any employee is capable of committing a dishonest act under the right circumstances.

TRUE

Audit committee oversight also serves as a deterrent to fraud by senior management.

TRUE

The subsidiary ledger agrees with the general ledger.

When the auditor identifies risk at the assertion level,

A) the auditor may need to obtain audit evidence that is more reliable and relevant.

Because fraud perpetrators are often knowledgeable about audit procedures, auditors should incorporate unpredictability into the audit plan.

TRUE

The auditors should pay careful attention to accounting principles that involve subjective measurements or complex transactions.

TRUE

Auditing standards specifically require auditors to identify ________ as a fraud risk in most audits.

revenue recognition

Company management is often under pressure to increase revenue and/or net income. One approach is to use a "bill and hold" arrangement. This is an example of which of the following?

premature revenue recognized

Analytical procedures can be very effective in detecting inventory fraud. Which of the following analytical procedures would not be useful in detecting fraud?

accounts receivable turnover

When dealing with revenue frauds,

side agreements can modify the terms of the sales transaction and should be analyzed

Two of the most useful warning signals that can indicate that revenue fraud is occurring are

analytical procedures and documentary discrepancies.

Fictitious revenues

lower accounts receivable turnover.

Which of the following is a correct statement regarding the misappropriation of receipts involving revenue?

If a customer's payment is stolen, regular billing of unpaid accounts can uncover the fraud unless the fraud perpetrator does something to hide the theft.

When analyzing accounts for fraud risk,

payroll is rarely a significant risk for fraudulent financial reporting.

When dealing with fraudulent financial reporting risk for accounts payable,

companies have used fictitious reductions to accounts payable to overstate net income.

Which of the following is an accurate statement regarding assets and fraud risk?

Companies will often capitalize repairs as fixed assets.

When the allowance for doubtful accounts is understated, bad debt expense is understated and net income is also understated.

FALSE

Fictitious revenue transactions have the same level of documentary evidence as legitimate transactions.

FALSE

Auditors should rely on original, rather than duplicate, copies of documents.

TRUE

The two most common areas of fraud in payroll are the creation of fictitious employees and the overstatement of individual payroll hours.

TRUE

To address heightened risks of fraud, the auditor can do all of the following except

decrease the amount of substantive tests.

Which of the following is least likely to uncover fraud?

external auditors

Which of the following is not a category of inquiry used by auditors?

declarative inquiry

________ inquiry is used to obtain information about facts and details that the auditor does not have, usually about past or current events or processes.

Informational

An auditor uses ________ inquiry to corroborate or contradict prior information.

assessment

When the auditor suspects that fraud may be present, auditing standards require the auditor to

obtain additional evidence to determine whether material fraud has occurred.

With whom should the auditor communicate whenever he or she determines that senior management fraud may be present, even if the matter might be considered inconsequential?

audit committee

Most frauds are detected by

a tip

The auditor has a responsibility to notify law enforcement when fraud is suspected.

FALSE

Most frauds are discovered by accident.

FALSE

Auditors may expand other substantive procedures to address the heightened risks of fraud.

TRUE

If auditors determine that there is not a significant risk of material improper revenue recognition, no documentation of this decision is required.

FALSE

Auditing standards require that auditors document

results of the procedures performed to address the risk of management override of controls.