WGU C254 Topic 3 Questions And Answers!!

According to the financial statement fraud detection framework, fraud is rarely detected by which of the following: a. Analyzing the financial statements b. Understanding the inherent risks of a specific industry c. Learning management's motivations d. Breaking down and analyzing internal controls - Analyzing the Financial statements True or False Fearful of offending company personnel and being intimidated by company management are two reasons that an auditor could fail to react properly to negative evidence. - True True or False An active board of directors and audit committee drastically decreases the opportunity for management to commit fraud. - True Of all the four corners of the fraud exposure rectangle, auditors traditionally focused on which part (and thus failed to evaluate the other three corners)? a. Organization and Industry b. Management and Directors c. Relationships with the entities d. Financial Results and Operating Characteristics - Financial Results and Operating Characteristics Financial statement fraud occurs over 85 percent of the time, from collusion occurring among middle managers, to low management, thus fooling auditors and top management. - False Financial statement fraud is usually perpetrated by top management, and most often in behalf of the organization.The importance of examining directors and management is to determine their exposure to, and motivation for committing fraud is immaterial. - FALSE - Management always as access to all three corner of the fraud triangle (attitude, opportunity, and incentive)