WGU C254 Pre Assessment questions with verified
answers
According to SAS 99, why is brainstorming important to auditors?
To close the expectation gap of financial statements reporting
To avoid overreacting to the red flags that occur in the audit
To comprehend the registration process of public accounting firms
To document findings among auditors to increase the likelihood of detecting
fraud Ans✓✓✓ To avoid overreacting to the red flags that occur in the audit
As part of being a good ethical corporate citizen, what does Federal Executive
Order 11246 require of organizations working under a government contract?
Affirmative action programs in place
Minimize the risk of unethical practices
Documentary proof of compliance with GAAP
Policies to rehire workers wrongfully fired for whistle-blowing Ans✓✓✓
Affirmative action programs in place
How can financial statement fraud impact stakeholders?
Investors may experience lower interest rates.
Fraud can be an embarrassment to the audit profession.
Investors may be more willing to purchase new stock issues.
,Fraud can lead to stock options decreasingly being used for executive
compensation. Ans✓✓✓ Fraud can be an embarrassment to the audit profession.
How do fraudulent financial statements impact stakeholders and the markets?
Financial statement fraud leads to embezzlement.
Interest rates rise as a result of financial statement fraud.
Financial statement fraud leads investors to lose confidence.
CEOs acquire additional company stock following financial statement fraud.
Ans✓✓✓ Financial statement fraud leads investors to lose confidence.
How often must the lead audit partner and audit review partner be rotated under
the Sarbanes-Oxley Act?
Every year
Every five years
Every two years
Every seven years Ans✓✓✓
Prior to the Sarbanes-Oxley regulations and according to SAS 16, under what
circumstances can auditors rely upon the truthfulness of records obtained from
the client?
Until there is evidence to suggest otherwise
After a thorough internal control investigation
After management has taken polygraph examinations
, Once substantial testing on the reliability of records has been conducted
Ans✓✓✓ Until there is evidence to suggest otherwise
Under the Sarbanes-Oxley Act, which statement is true regarding the Public
Company Accounting Oversight Board (PCAOB)?
It cannot sue or be sued in any U.S. court.
It can sue and be sued in any U.S. court with the approval of the SEC.
It cannot sue, but it can be sued in any U.S. court with the approval of the SEC.
It can sue with the approval of the SEC, but it cannot be sued in any U.S. court.
Ans✓✓✓ It can sue and be sued in any U.S. court with the approval of the SEC.
What are two examples of asset overstatement fraud?Choose 2 answers
Unauthorized asset-related transactions are recorded.
Amounts recorded for assets between unrelated parties are inflated.
Assets are overstated by capitalizing instead of expensing start-up costs.
Assets through mergers are recorded at book value instead of market value.
Ans✓✓✓ Unauthorized asset-related transactions are recorded
Assets are overstated by capitalizing instead of expensing start-up costs.
What are two potential consequences a company accused of financial statement
fraud can face? Choose 2 answers
The CEO might be indicted and convicted.
answers
According to SAS 99, why is brainstorming important to auditors?
To close the expectation gap of financial statements reporting
To avoid overreacting to the red flags that occur in the audit
To comprehend the registration process of public accounting firms
To document findings among auditors to increase the likelihood of detecting
fraud Ans✓✓✓ To avoid overreacting to the red flags that occur in the audit
As part of being a good ethical corporate citizen, what does Federal Executive
Order 11246 require of organizations working under a government contract?
Affirmative action programs in place
Minimize the risk of unethical practices
Documentary proof of compliance with GAAP
Policies to rehire workers wrongfully fired for whistle-blowing Ans✓✓✓
Affirmative action programs in place
How can financial statement fraud impact stakeholders?
Investors may experience lower interest rates.
Fraud can be an embarrassment to the audit profession.
Investors may be more willing to purchase new stock issues.
,Fraud can lead to stock options decreasingly being used for executive
compensation. Ans✓✓✓ Fraud can be an embarrassment to the audit profession.
How do fraudulent financial statements impact stakeholders and the markets?
Financial statement fraud leads to embezzlement.
Interest rates rise as a result of financial statement fraud.
Financial statement fraud leads investors to lose confidence.
CEOs acquire additional company stock following financial statement fraud.
Ans✓✓✓ Financial statement fraud leads investors to lose confidence.
How often must the lead audit partner and audit review partner be rotated under
the Sarbanes-Oxley Act?
Every year
Every five years
Every two years
Every seven years Ans✓✓✓
Prior to the Sarbanes-Oxley regulations and according to SAS 16, under what
circumstances can auditors rely upon the truthfulness of records obtained from
the client?
Until there is evidence to suggest otherwise
After a thorough internal control investigation
After management has taken polygraph examinations
, Once substantial testing on the reliability of records has been conducted
Ans✓✓✓ Until there is evidence to suggest otherwise
Under the Sarbanes-Oxley Act, which statement is true regarding the Public
Company Accounting Oversight Board (PCAOB)?
It cannot sue or be sued in any U.S. court.
It can sue and be sued in any U.S. court with the approval of the SEC.
It cannot sue, but it can be sued in any U.S. court with the approval of the SEC.
It can sue with the approval of the SEC, but it cannot be sued in any U.S. court.
Ans✓✓✓ It can sue and be sued in any U.S. court with the approval of the SEC.
What are two examples of asset overstatement fraud?Choose 2 answers
Unauthorized asset-related transactions are recorded.
Amounts recorded for assets between unrelated parties are inflated.
Assets are overstated by capitalizing instead of expensing start-up costs.
Assets through mergers are recorded at book value instead of market value.
Ans✓✓✓ Unauthorized asset-related transactions are recorded
Assets are overstated by capitalizing instead of expensing start-up costs.
What are two potential consequences a company accused of financial statement
fraud can face? Choose 2 answers
The CEO might be indicted and convicted.
