Auditing and Assurance Services CH 4 Multiple-Choice Questions & Answers 100% Correct!

A. - ANSWER-4.20 Enterprise risk management is the responsibility of: a. Company management. b. The external auditors. c. The company's insurance providers. d. All of the above. C. - ANSWER-4.21 Failure to meet company objectives is a result of a. Information risk. b. Audit risk. c. Business risk. d. Inherent risk. D. - ANSWER-4.22 Auditing standards do not require auditors of financial statements to a. Understand the nature of errors and frauds. b. Assess the risk of occurrence of errors and frauds. c. Design audits to provide reasonable assurance of detecting errors and frauds. d. Report all errors and frauds found to police authorities. D. - ANSWER-4.23 If sales were overstated by recording a false credit sale at the end of the year, where could you find the false "dangling debit"? a. Inventory. b. Cost of goods sold. c. Bad debt expense. d. Accounts receivable. B. - ANSWER-4.24 One of the typical characteristics of management fraud is a. Falsification of documents in order to misappropriate funds from an employer. b. Victimization of investors through the use of materially misleading financial statements. c. Illegal acts committed by management to evade laws and regulations. d. Conversion of stolen inventory to cash deposited in a falsified bank account. B. - ANSWER-4.25 Which of the following circumstances would most likely cause an audit team to perform extended procedures? a. Supporting documents are produced when requested. b. The client made several large adjustments at or near year-end. c. The company has recently hired a new chief financial officer after the previous one retired. d. The company maintains several different petty cash funds. D. - ANSWER-4.26 The likelihood that material misstatements may have entered the accounting system and not been detected and corrected by the client's internal control is referred to as a. Inherent risk. b. Control risk.