Exam (elaborations)
CPA Exam - BEC (3)
- Course
- CISA - Chapter 1
- Institution
- CISA - Chapter 1
Exam of 2 pages for the course CISA - Chapter 1 at CISA - Chapter 1 (CPA Exam - BEC (3))
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CPA Exam - BECFraudulent External Financial Reporting - ANS-involves an intentional act to deceive the users
of the external financial reports
Misappropriation of assets - ANS-involves theft of the entity's assets
Illegal acts - ANS-violations of laws and regulations that could have a material direct or indirect
impact on the external financial reports
Components of fraud management program - ANS-company ethics policy, fraud awareness,
fraud risk assessment, ongoing reviews, prevention and detection, investigation
Control - ANS-the principal means of managing fraud and ensuring the components of the fraud
management program are present and functioning
control activities - ANS-policies and procedures for business processes that include authority
limits and segregation of duties
fraud-related information and communication practices - ANS-promote the fraud risk
management program and the organization's position on risk
monitoring - ANS-evaluates antifraud controls through independent evaluations of the fraud risk
management program and use of it
safeguarding of assets - ANS-protects the entities against the unauthorized use and disposal of
assets - theft of assets and intellectual property
Essential element in detecting fraud - ANS-employee feedback; fraud tips from employees-
whistleblower hotline, exit interviews, and employee surveys
What is management responsible for? - ANS-establishing and maintaining control
3 responsibilities of management - ANS-safeguarding of assets, fraudulent reporting, corruption,
such as illegal acts
Management Override - ANS-when management circumvents and entity's controls for an
illegitimate purpose, such as personal gain or enhanced presentation of the entity's position
Example of management override - ANS-management can approve sale of goods to customer
who does not meet the company's credit policies in order to increase revenue - management
overrides credit approval control
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