Whichm ofm them followingm ism anm examplem ofm fraudulentm financialm reporting?
ji ji ji ji ji ji ji ji ji ji
a.m Anm employeem divertsm customerm paymentsm tom hism personalm use,m concealing
ji ji ji ji ji ji ji ji ji ji
m hism actionsm bym debitingm anm expensem account,m thusm overstatingm expenses.
ji ji ji ji ji ji ji ji ji ji
b.m Companym managementm falsifiesm them inventorym count,m therebym overstatingm
ji ji ji ji ji ji ji ji ji
endingm inventorym andm understatingm costm ofm sales.
ji ji ji ji ji ji
c.m Anm employeem stealsm inventory,m andm them shrinkagem ism recordedm asm am costm
ji ji ji ji ji ji ji ji ji ji ji ji ji
ofm goodsm sold.
ji ji
d.m Anm employeem borrowsm smallm toolsm fromm them companym andm neglectsm tom ret
ji ji ji ji ji ji ji ji ji ji ji ji
urnm them;m them costm ism reportedm asm am miscellaneousm operatingm expense.m -
ji ji ji ji ji ji ji ji ji ji ji
m (correctm answer)m -
ji ji ji
b.m Companym managementm falsifiesm them inventorym count,m therebym overstatingm
ji ji ji ji ji ji ji ji ji
endingm inventorym andm understatingm costm ofm sales.
ji ji ji ji ji ji
Whichm ofm them followingm conceptsm arem pervasivem inm them applicationm ofm generall
ji ji ji ji ji ji ji ji ji ji ji
ym acceptedm auditingm standards,m particularlym them standardsm ofm fieldworkm andm
ji ji ji ji ji ji ji ji ji ji
reporting?m ji
A.m Internalm Control
ji ji
B.m Expectedm Misstatement
ji ji
C.m Controlm Risk ji ji
D.m Materialitym andm Auditm riskm -m (correctm answer)m -
ji ji ji ji ji ji ji ji
D.m Materialitym andm auditm risk
ji ji ji ji
Them existencem ofm auditm riskm ism recognizedm bym them statementm inm them auditor'sm
ji ji ji ji ji ji ji ji ji ji ji ji j
standardm reportm thatm them auditor
i ji ji ji ji
A.m Obtainsm reasonablem assurancem aboutm whetherm them financialm statementsm a
ji ji ji ji ji ji ji ji ji
rem freem ofm materialm misstatement
ji ji ji ji
,B.m Assessesm them accountingm principlesm usedm andm alsom evaluatesm them overallm f
ji ji ji ji ji ji ji ji ji ji ji
inancialm statementm presentation ji ji
C.m Realizesm thatm somem matters,m eitherm individuallym orm inm them aggregate,m arem i
ji ji ji ji ji ji ji ji ji ji ji ji
mportantm whilem otherm mattersm arem notm important. ji ji ji ji ji ji
D.m Ism responsiblem form expressingm anm opinionm onm them financialm statements,m w
ji ji ji ji ji ji ji ji ji ji ji
hichm arem them responsibilitym ofm management.m -m (correctm answer)m -
ji ji ji ji ji ji ji ji ji
A.m Obtainsm reasonablem assurancem aboutm whetherm them financialm statementsm a
ji ji ji ji ji ji ji ji ji
rem freem ofm materialm misstatement
ji ji ji ji
Riskm ofm materialm misstatementm refersm tom am combinationm ofm whichm twom "client"
ji ji ji ji ji ji ji ji ji ji ji
m componentsm ofm them auditm riskm model?m
ji ji ji ji ji ji ji
A.m Auditm riskm andm inherentm risk
ji ji ji ji ji
B.m Auditm riskm andm controlm risk
ji ji ji ji ji
C.m Inherentm riskm andm controlm risk
ji ji ji ji ji
D.m Controlm riskm andm detectionm riskm -m (correctm answer)m -
ji ji ji ji ji ji ji ji ji
C.m Inherentm riskm andm controlm risk
ji ji ji ji ji
Asm lowerm acceptablem levelsm ofm bothm auditm riskm andm materialitym arem establishe
ji ji ji ji ji ji ji ji ji ji ji
d,m them auditorm shouldm planm morem workm onm individualm accountsm to
ji ji ji ji ji ji ji ji ji ji
A.m Findm smallerm errors
ji ji ji
B.m Findm largerm errors
ji ji ji
C.m Increasem them tolerablem misstatementsm inm them accounts
ji ji ji ji ji ji ji
D.m decreasem them riskm ofm overreliancem -m (correctm answer)m -
ji ji ji ji ji ji ji ji ji
A.m findm smallerm errors
ji ji ji
Whenm ism am dutym tom disclosem fraudm tom partiesm otherm thanm them client'sm seniorm
ji ji ji ji ji ji ji ji ji ji ji ji ji ji
managementm andm itsm auditm committeem mostm likelym tom exist? ji ji ji ji ji ji ji ji
A.m Whenm them amountm ism material
ji ji ji ji ji
B.m Whenm them fraudm resultsm inm them misappropriationm ofm assetsm ratherm thanm fr
ji ji ji ji ji ji ji ji ji ji ji ji
audulentm financialm reporting ji ji
C.m Inm responsem tom inquiriesm fromm am successorm auditor
ji ji ji ji ji ji ji ji
, D.m Whenm am linem managerm ratherm thanm am lower-
ji ji ji ji ji ji ji ji
levelm employeem commitsm them fraudulentm actm -m (correctm answer)m -
ji ji ji ji ji ji ji ji ji
C.m Inm responsem tom inquiriesm fromm am successorm auditor
ji ji ji ji ji ji ji ji
Whichm ofm them followingm characteristicsm mostm likelym wouldm heightenm anm audito
ji ji ji ji ji ji ji ji ji ji
r'sm concernm aboutm them riskm ofm intentionalm manipulationm ofm financialm stateme
ji ji ji ji ji ji ji ji ji ji
nts?
A.m Turnoverm ofm seniorm accountingm personnelm ism low
ji ji ji ji ji ji ji
B.m Insidersm recentlym purchasedm additionalm sharesm ofm them entity'sm stock
ji ji ji ji ji ji ji ji ji
C.m Managementm placesm substantialm emphasism onm meetingm earningsm projectio
ji ji ji ji ji ji ji ji
ns
D.m Them ratem ofm changem inm them entity'sm industrym ism slowm -m (correctm answer)m -
ji ji ji ji ji ji ji ji ji ji ji ji ji ji
C.m Managementm placesm substantialm emphasism onm meetingm earningsm projectio
ji ji ji ji ji ji ji ji
ns
Whichm ofm them followingm ism am misappropriationm ofm assets?
ji ji ji ji ji ji ji ji
A.m Classifyingm inventorym heldm form resalem asm supplies
ji ji ji ji ji ji ji
B.m Investingm cashm andm earningm am 3m percentm ratem ofm returnm asm opposedm tom pa
ji ji ji ji ji ji ji ji ji ji ji ji ji ji
yingm offm am loanm withm anm interestm ratem ofm 7m percent
ji ji ji ji ji ji ji ji ji ji
C.m Anm employeem ofm am consumerm electronicsm storem stealsm 12m CDm players.
ji ji ji ji ji ji ji ji ji ji ji
D.m Managementm estimatesm badm debtm expensem asm 2m percentm ofm salesm whenm itm
ji ji ji ji ji ji ji ji ji ji ji ji j
actuallym expectsm badm debtsm equalm tom 10m percentm ofm sales.m -
i ji ji ji ji ji ji ji ji ji ji
m (correctm answer)m -
ji ji ji
C.m Anm employeem ofm am consumerm electronicsm storem stealsm 12m CDm players.
ji ji ji ji ji ji ji ji ji ji ji
Auditingm standardsm requirem auditorsm tom makem certainm inquiriesm ofm manageme
ji ji ji ji ji ji ji ji ji
ntm regardingm fraud.m Whichm ofm them followingm inquiriesm ism required?m
ji ji ji ji ji ji ji ji ji ji
A.m Whetherm managementm hasm everm intentionallym violatedm them securitiesm laws
ji ji ji ji ji ji ji ji ji
B.m Whetherm managementm hasm anym knowledgem ofm fraudm thatm hasm beenm perpet
ji ji ji ji ji ji ji ji ji ji ji
ratedm onm orm withinm them entity
ji ji ji ji ji
C.m Management'sm attitudesm towardm regulatorym authorities
ji ji ji ji ji
D.m Management'sm attitudem aboutm hiringm ethicalm employees.m -
ji ji ji ji ji ji ji
m (correctm answer)m -
ji ji ji
ji ji ji ji ji ji ji ji ji ji
a.m Anm employeem divertsm customerm paymentsm tom hism personalm use,m concealing
ji ji ji ji ji ji ji ji ji ji
m hism actionsm bym debitingm anm expensem account,m thusm overstatingm expenses.
ji ji ji ji ji ji ji ji ji ji
b.m Companym managementm falsifiesm them inventorym count,m therebym overstatingm
ji ji ji ji ji ji ji ji ji
endingm inventorym andm understatingm costm ofm sales.
ji ji ji ji ji ji
c.m Anm employeem stealsm inventory,m andm them shrinkagem ism recordedm asm am costm
ji ji ji ji ji ji ji ji ji ji ji ji ji
ofm goodsm sold.
ji ji
d.m Anm employeem borrowsm smallm toolsm fromm them companym andm neglectsm tom ret
ji ji ji ji ji ji ji ji ji ji ji ji
urnm them;m them costm ism reportedm asm am miscellaneousm operatingm expense.m -
ji ji ji ji ji ji ji ji ji ji ji
m (correctm answer)m -
ji ji ji
b.m Companym managementm falsifiesm them inventorym count,m therebym overstatingm
ji ji ji ji ji ji ji ji ji
endingm inventorym andm understatingm costm ofm sales.
ji ji ji ji ji ji
Whichm ofm them followingm conceptsm arem pervasivem inm them applicationm ofm generall
ji ji ji ji ji ji ji ji ji ji ji
ym acceptedm auditingm standards,m particularlym them standardsm ofm fieldworkm andm
ji ji ji ji ji ji ji ji ji ji
reporting?m ji
A.m Internalm Control
ji ji
B.m Expectedm Misstatement
ji ji
C.m Controlm Risk ji ji
D.m Materialitym andm Auditm riskm -m (correctm answer)m -
ji ji ji ji ji ji ji ji
D.m Materialitym andm auditm risk
ji ji ji ji
Them existencem ofm auditm riskm ism recognizedm bym them statementm inm them auditor'sm
ji ji ji ji ji ji ji ji ji ji ji ji j
standardm reportm thatm them auditor
i ji ji ji ji
A.m Obtainsm reasonablem assurancem aboutm whetherm them financialm statementsm a
ji ji ji ji ji ji ji ji ji
rem freem ofm materialm misstatement
ji ji ji ji
,B.m Assessesm them accountingm principlesm usedm andm alsom evaluatesm them overallm f
ji ji ji ji ji ji ji ji ji ji ji
inancialm statementm presentation ji ji
C.m Realizesm thatm somem matters,m eitherm individuallym orm inm them aggregate,m arem i
ji ji ji ji ji ji ji ji ji ji ji ji
mportantm whilem otherm mattersm arem notm important. ji ji ji ji ji ji
D.m Ism responsiblem form expressingm anm opinionm onm them financialm statements,m w
ji ji ji ji ji ji ji ji ji ji ji
hichm arem them responsibilitym ofm management.m -m (correctm answer)m -
ji ji ji ji ji ji ji ji ji
A.m Obtainsm reasonablem assurancem aboutm whetherm them financialm statementsm a
ji ji ji ji ji ji ji ji ji
rem freem ofm materialm misstatement
ji ji ji ji
Riskm ofm materialm misstatementm refersm tom am combinationm ofm whichm twom "client"
ji ji ji ji ji ji ji ji ji ji ji
m componentsm ofm them auditm riskm model?m
ji ji ji ji ji ji ji
A.m Auditm riskm andm inherentm risk
ji ji ji ji ji
B.m Auditm riskm andm controlm risk
ji ji ji ji ji
C.m Inherentm riskm andm controlm risk
ji ji ji ji ji
D.m Controlm riskm andm detectionm riskm -m (correctm answer)m -
ji ji ji ji ji ji ji ji ji
C.m Inherentm riskm andm controlm risk
ji ji ji ji ji
Asm lowerm acceptablem levelsm ofm bothm auditm riskm andm materialitym arem establishe
ji ji ji ji ji ji ji ji ji ji ji
d,m them auditorm shouldm planm morem workm onm individualm accountsm to
ji ji ji ji ji ji ji ji ji ji
A.m Findm smallerm errors
ji ji ji
B.m Findm largerm errors
ji ji ji
C.m Increasem them tolerablem misstatementsm inm them accounts
ji ji ji ji ji ji ji
D.m decreasem them riskm ofm overreliancem -m (correctm answer)m -
ji ji ji ji ji ji ji ji ji
A.m findm smallerm errors
ji ji ji
Whenm ism am dutym tom disclosem fraudm tom partiesm otherm thanm them client'sm seniorm
ji ji ji ji ji ji ji ji ji ji ji ji ji ji
managementm andm itsm auditm committeem mostm likelym tom exist? ji ji ji ji ji ji ji ji
A.m Whenm them amountm ism material
ji ji ji ji ji
B.m Whenm them fraudm resultsm inm them misappropriationm ofm assetsm ratherm thanm fr
ji ji ji ji ji ji ji ji ji ji ji ji
audulentm financialm reporting ji ji
C.m Inm responsem tom inquiriesm fromm am successorm auditor
ji ji ji ji ji ji ji ji
, D.m Whenm am linem managerm ratherm thanm am lower-
ji ji ji ji ji ji ji ji
levelm employeem commitsm them fraudulentm actm -m (correctm answer)m -
ji ji ji ji ji ji ji ji ji
C.m Inm responsem tom inquiriesm fromm am successorm auditor
ji ji ji ji ji ji ji ji
Whichm ofm them followingm characteristicsm mostm likelym wouldm heightenm anm audito
ji ji ji ji ji ji ji ji ji ji
r'sm concernm aboutm them riskm ofm intentionalm manipulationm ofm financialm stateme
ji ji ji ji ji ji ji ji ji ji
nts?
A.m Turnoverm ofm seniorm accountingm personnelm ism low
ji ji ji ji ji ji ji
B.m Insidersm recentlym purchasedm additionalm sharesm ofm them entity'sm stock
ji ji ji ji ji ji ji ji ji
C.m Managementm placesm substantialm emphasism onm meetingm earningsm projectio
ji ji ji ji ji ji ji ji
ns
D.m Them ratem ofm changem inm them entity'sm industrym ism slowm -m (correctm answer)m -
ji ji ji ji ji ji ji ji ji ji ji ji ji ji
C.m Managementm placesm substantialm emphasism onm meetingm earningsm projectio
ji ji ji ji ji ji ji ji
ns
Whichm ofm them followingm ism am misappropriationm ofm assets?
ji ji ji ji ji ji ji ji
A.m Classifyingm inventorym heldm form resalem asm supplies
ji ji ji ji ji ji ji
B.m Investingm cashm andm earningm am 3m percentm ratem ofm returnm asm opposedm tom pa
ji ji ji ji ji ji ji ji ji ji ji ji ji ji
yingm offm am loanm withm anm interestm ratem ofm 7m percent
ji ji ji ji ji ji ji ji ji ji
C.m Anm employeem ofm am consumerm electronicsm storem stealsm 12m CDm players.
ji ji ji ji ji ji ji ji ji ji ji
D.m Managementm estimatesm badm debtm expensem asm 2m percentm ofm salesm whenm itm
ji ji ji ji ji ji ji ji ji ji ji ji j
actuallym expectsm badm debtsm equalm tom 10m percentm ofm sales.m -
i ji ji ji ji ji ji ji ji ji ji
m (correctm answer)m -
ji ji ji
C.m Anm employeem ofm am consumerm electronicsm storem stealsm 12m CDm players.
ji ji ji ji ji ji ji ji ji ji ji
Auditingm standardsm requirem auditorsm tom makem certainm inquiriesm ofm manageme
ji ji ji ji ji ji ji ji ji
ntm regardingm fraud.m Whichm ofm them followingm inquiriesm ism required?m
ji ji ji ji ji ji ji ji ji ji
A.m Whetherm managementm hasm everm intentionallym violatedm them securitiesm laws
ji ji ji ji ji ji ji ji ji
B.m Whetherm managementm hasm anym knowledgem ofm fraudm thatm hasm beenm perpet
ji ji ji ji ji ji ji ji ji ji ji
ratedm onm orm withinm them entity
ji ji ji ji ji
C.m Management'sm attitudesm towardm regulatorym authorities
ji ji ji ji ji
D.m Management'sm attitudem aboutm hiringm ethicalm employees.m -
ji ji ji ji ji ji ji
m (correctm answer)m -
ji ji ji
