24905560
Description
Quiz by Kayla Harbaugh, updated more than 1 year ago
|
Created by Kayla Harbaugh
over 3 years ago
|
|
Question 1
Question
What is the primary difference between fraud and error in financial statement reporting?
Answer
-
The level of management involved
-
The type of transaction effected
-
The intent to deceive
-
The materiality of the misstatement
Question 2
Question
Which of the following is a common rationalization for fraudulent financial reporting?
Answer
-
This is a one-time transaction and it will allow the company to get through the current financial crisis, but I'll never do it again.
-
No-one will be hurt if I take some inventory for personal use. No-one will even know.
-
I am only borrowing the money; I will pay it back next year.
-
Executives at other companies are getting paid more than I am, so I deserve the money.
Question 3
Question
Which of the following types of transactions did WorldCom management engage in as part of that company's fraudulent financial reporting scheme?
Answer
-
Recorded barter transactions as sales
-
Used restructuring reserves from prior acquisitions to decrease expenses
-
Capitalized line costs rather than expensed them
-
All of these
Question 4
Question
Which of the following statements is true?
Answer
-
Unless an independent audit can provide reasonable assurance that financial information has not been materially misstated because of fraud, it has little, if any, value to society.
-
Repeated revelations of accounting scandals and audit failures related to undetected frauds have seriously damaged public confidence in external auditors
-
A strong ethical tone at the top of an organization that permeates corporate culture is essential in mitigating the risk of fraud
-
All of these
-
None of these
Question 5
Question
Refer to Exhibit 2.5. The Sarbanes-Oxley Act enacted which of the following provisions relevant to auditors and the audit opinion formulation process?
Answer
-
The PCAOB was established, and it has the power to conduct inspections of public company audits.
-
The lead audit partner and reviewing partner must rotate off the audit of a publicly traded company at least every 10 years.
-
In the annual report, management must acknowledge that they are required to have the company's internal audit function attest to the accuracy of the annual reports.
-
All of these
-
None of these
Question 6
Question
Audit committee activities and responsibilities include which of the following?
Answer
-
Selecting the external audit firm
-
Approving corporate strategy
-
Reviewing management performance and determining compensation
-
All of these
-
None of these
Question 7
Question
The three elements of the fraud triangle include incentive, opportunity, and rationalization.
Answer
- True
- False
Question 8
Question
In the Enron fraud, one of the ways that management covered up the fraud was to shift debt off the balance sheet to SPEs.
Answer
- True
- False
Question 9
Question
An important change resulting from the Sarbanes-Oxley Act is that auditors are no longer allowed to provide most consulting services for their public company audit clients.
Answer
- True
- False
Question 10
Question
The term corporate governance mosaic refers to the fact that each of the parties involved in corporate governance has complementary roles and specific responsibilities; no one party is completely responsible.
Answer
- True
- False
Want to create your own Quizzes for free with GoConqr? Learn more.