Kayla Harbaugh
Test por , creado hace más de 1 año

Chapter 2 Homework

127
0
0
Kayla Harbaugh
Creado por Kayla Harbaugh hace casi 4 años
Cerrar

Chapter 2 Homework

Pregunta 1 de 30

1

Which of the following best represents fraud related to financial reporting?

Selecciona una de las siguientes respuestas posibles:

  • The in-house attorney receives payments from the French government for negotiating the development of a new plant in Paris.

  • The controller of the company decreases warranty expense by $3 million because the company will otherwise miss analysts' expectations this quarter.

  • The accounts receivable clerk covers up the theft of cash receipts by writing off older receivables without authorization.

  • The transfer agent issues 40,000 shares of the company's stock to a friend without authorization by the board of directors.

Explicación

Pregunta 2 de 30

1

According to professional auditing standards, which of the following best represents a type of fraudulent financial reporting?

Selecciona una de las siguientes respuestas posibles:

  • Management reclassifies a negative cash balance by decreasing cash and increasing a current liability.

  • Management intentionally excludes from its consolidated results a subsidiary that it controls significantly.

  • Management discloses its failure to meet loan covenants but states that a waiver has been received.

  • Management accrues a liability and discloses the possible outcome of a lawsuit prior to settling the matter.

Explicación

Pregunta 3 de 30

1

What type of fraud occurs when the deposits of current investors are used to pay returns on the deposits of previous investors with no real investment happening?

Selecciona una de las siguientes respuestas posibles:

  • Channel Stuffing

  • Off-Balance Sheet Fraud

  • Skimming

  • Ponzi Scheme

Explicación

Pregunta 4 de 30

1

Which of the following is an example of fraud?

Selecciona una de las siguientes respuestas posibles:

  • An incorrect accounting estimate arising from misinterpretation of facts.

  • A mistake in the application of accounting principles.

  • Misappropriation of an asset.

  • A mistake in processing accounting data.

Explicación

Pregunta 5 de 30

1

What is the primary determinant in the difference between fraud and errors in financial statement reporting?

Selecciona una de las siguientes respuestas posibles:

  • The type of transaction affected.

  • The materiality of the misstatement.

  • The intent to deceive.

  • The level of management involved.

Explicación

Pregunta 6 de 30

1

Which of the following frauds is most common?

Selecciona una de las siguientes respuestas posibles:

  • Management's theft of cash held in reserve accounts.

  • Over-recording expenses related to stock options.

  • Misapplication of revenue recognition principles.

  • Chief financial officer’s misappropriation of funds.

Explicación

Pregunta 7 de 30

1

The fraud triangle identifies three elements that are generally present in the client’s organization when fraud occurs. Which of the following is not one of those elements?

Selecciona una de las siguientes respuestas posibles:

  • Professional skepticism

  • Incentives

  • Opportunity

  • Rationalization

Explicación

Pregunta 8 de 30

1

Which of the following is a common incentive or condition that increases the likelihood for fraudulent financial reporting?

Selecciona una de las siguientes respuestas posibles:

  • Access to undeposited cash

  • Ineffective segregation of assets

  • Management bonuses based on reported earnings

  • Significant related party transactions

Explicación

Pregunta 9 de 30

1

Management of Premium Discovery Company is compensated through large salaries, stock options, and bonuses tied to the company's working capital growth. The CEO is constantly holding meetings to ensure that management is on target for increased operating income each month. Based solely on the preceding information, which element of the fraud triangle exists at the Premium Discovery Company?

Selecciona una de las siguientes respuestas posibles:

  • Incentive

  • Opportunity

  • Rationalization

  • Expectation

Explicación

Pregunta 10 de 30

1

Sam Jones, controller of Mitnikco, spends three days researching the accounting standards to find loopholes in the "rules" and to make a case for recognizing revenue earlier, rather than in later years. In the end, Sam and the other members of management determine that they will reduce the company's deferred revenue accounts and begin accounting for all revenues as agreements are signed. Based solely on the preceding information, which element of fraud is represented by the actions of Mitnikco management?

Selecciona una de las siguientes respuestas posibles:

  • Pressures

  • Skepticism

  • Opportunity

  • Rationalization

Explicación

Pregunta 11 de 30

1

The fraud triangle has three elements. Which of the elements must be present for a fraud to occur?

Selecciona una de las siguientes respuestas posibles:

  • All elements must be present for fraud to occur.

  • At least two of the three elements must be present for fraud to occur.

  • Fraud can occur if any one of the elements is present.

  • None of the above.

Explicación

Pregunta 12 de 30

1

Who is most often involved in perpetrating fraudulent financial reporting?

Selecciona una de las siguientes respuestas posibles:

  • The auditors and the attorneys.

  • The shareholders and the chief operating officer.

  • The treasurer and the board of directors.

  • The chief executive and chief financial officer.

Explicación

Pregunta 13 de 30

1

What is the best way an auditor can detect fraud in the financial statements?

Selecciona una de las siguientes respuestas posibles:

  • Brainstorm with the client to find the types of fraud occurring.

  • Actively search for errors in the financial statements.

  • Understand Generally Accepted Accounting Standards.

  • Use professional skepticism.

Explicación

Pregunta 14 de 30

1

Which of the following best describes professional skepticism?

Selecciona una de las siguientes respuestas posibles:

  • A questioning mind

  • A firm commitment to auditing standards and ethics

  • An intent to deceive

  • An attitude of intrusion and obstinacy

Explicación

Pregunta 15 de 30

1

Why is fraud detection an important part of the audit?

Selecciona una de las siguientes respuestas posibles:

  • Auditors are required to seek out and find all fraud, regardless of its magnitude.

  • Society expects that financial statements have not been materially misstated due to fraud.

  • Auditors expect that management will make them aware of any fraud in the financial statements.

  • Society realizes that some fraud was not intended to be discovered by auditors.

Explicación

Pregunta 16 de 30

1

One of the primary goals of the PCAOB is to restore confidence in which group?

Selecciona una de las siguientes respuestas posibles:

  • Independent auditors

  • The SEC

  • Board of directors

  • Internal auditors

Explicación

Pregunta 17 de 30

1

Which of the following statements reflects an auditor’s responsibility for detecting fraud?

Selecciona una de las siguientes respuestas posibles:

  • An auditor is only responsible for detecting fraudulent financial reporting.

  • The audit should be planned to detect only fraud caused by departures from GAAP.

  • An auditor is not responsible for discovering fraudulent acts involving employee collusion.

  • An auditor should design the audit to provide reasonable assurance of detecting errors and fraud that are material to the financial statements.

Explicación

Pregunta 18 de 30

1

How must an auditor address fraud in the planning stage?

Selecciona una de las siguientes respuestas posibles:

  • The auditor must not be aggressive in its initial approach to fraud, as trust may be lost by the client.

  • The auditor must consider the likelihood of fraud existing in the company in the planning stage.

  • The auditor must test for fraud in the planning stage by sampling accounts.

  • The auditor must realize that most people are honest and not automatically assume that fraud exists when planning the audit.

Explicación

Pregunta 19 de 30

1

What should an audit team do when it discovers that fraud risk factors are present on an audit engagement?

Selecciona una de las siguientes respuestas posibles:

  • Withdraw from the engagement and inform regulatory bodies.

  • Reduce the amount of evidence required and resort to management inquiry.

  • Modify procedures to actively search for the existence of fraud.

  • Turn the audit over to forensic accountants.

Explicación

Pregunta 20 de 30

1

Which of the following best represents actions that may indicate fraud is pervasive throughout the company under audit?

Selecciona una de las siguientes respuestas posibles:

  • The company's management negotiates deals with vendors in such a manner as to pay lower prices.

  • The company's management estimates bad debts using an aged accounts receivables ledger rather than as a percent of sales.

  • The company's management drives luxury vehicles and takes vacations to exotic places.

  • The company's management takes an overly aggressive approach to revenue recognition.

Explicación

Pregunta 21 de 30

1

According to professional audit standards, how might auditors gain an understanding of the nature of fraud that may occur in the client organization?

Selecciona una de las siguientes respuestas posibles:

  • Discussions with other audit firms

  • Circulating a survey to the client company employees for completion.

  • Fraud training courses from actual corporate fraud ex-criminals.

  • Conducting a brainstorming session with the members of the audit team.

Explicación

Pregunta 22 de 30

1

There are many important reasons for diligent audit planning. If an audit firm wrongly skips the planning stage of an audit, what will be the effect relative to fraud detection?

Selecciona una de las siguientes respuestas posibles:

  • The firm will not be able to apply GAAP to the financial statements.

  • The firm will not adequately identify the types of fraud that may occur in the client company.

  • The firm will not be able to perform direct tests of account balances.

  • The firm will lack the competency and technical training necessary to complete the audit in accordance with GAAS.

Explicación

Pregunta 23 de 30

1

Which of the following factors should an auditor consider in evaluating the effect of fraud upon the planned audit procedures?

Selecciona una de las siguientes respuestas posibles:

  • The type of fraud that may occur

  • The potential materiality of fraud

  • The likelihood of fraud occurring

  • All of the above

Explicación

Pregunta 24 de 30

1

How did the Sarbanes-Oxley Act strengthen auditor independence?

Selecciona una de las siguientes respuestas posibles:

  • By requiring auditors to provide reports in accordance with the Foreign Corrupt Practices Act.

  • By requiring auditors to report the nature of any auditor-client disagreements to the SEC.

  • By requiring a different audit firm from the one that performs the audit to prepare the client’s tax return.

  • By requiring the lead partner to rotate off the audit engagement at least every five years.

Explicación

Pregunta 25 de 30

1

Which of the following is a responsibility of the PCAOB?

Selecciona una de las siguientes respuestas posibles:

  • To set financial reporting standards for private companies.

  • To set audit standards for private companies.

  • To set audit standards for public companies.

  • To set financial reporting standards for public companies.

Explicación

Pregunta 26 de 30

1

Under the Sarbanes-Oxley Act, which of the following services performed by registered accounting firms for their audit clients would not impair their independence?

Selecciona una de las siguientes respuestas posibles:

  • Internal audit services

  • Tax services

  • Appraisal services

  • Systems design

Explicación

Pregunta 27 de 30

1

Which of the following items are registered audit firms not required to report to the audit committee?

Selecciona una de las siguientes respuestas posibles:

  • Alternative treatments of financial information within generally accepted accounting principles that have been considered by management, as well as the preferred treatment of the audit firm.

  • Critical accounting policies and practices.

  • Significant written communications between the audit firm and management.

  • A list of all audit procedures performed

Explicación

Pregunta 28 de 30

1

Which of the following is a specific corporate governance responsibility of executive management?

Selecciona una de las siguientes respuestas posibles:

  • Approving major changes, such as mergers.

  • Reviewing the budget of the internal audit function.

  • Approving non-audit work performed by the audit firm.

  • Implementing an effective ethical environment.

Explicación

Pregunta 29 de 30

1

Which of the following is a specific governance responsibility of the board of directors of a public corporation?

Selecciona una de las siguientes respuestas posibles:

  • Managing and reviewing operations.

  • Selecting the external audit firm.

  • Implementing effective internal controls.

  • Approving corporate strategy.

Explicación

Pregunta 30 de 30

1

Which of the following is not a specific responsibility of an audit committee as mandated by the NYSE?

Selecciona una de las siguientes respuestas posibles:

  • Creating and implementing internal controls.

  • Setting hiring policies for former employees of the external auditor.

  • Discussing the company’s financial statements with the external auditor.

  • Discussing financial information provided to analysts.

Explicación

Anterior
Revisar respuesta
Siguiente