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ACG 3401 Examlet 2 (1)

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ACG 3401 Examlet 2 (1)

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  • July 29, 2024
  • 10
  • 2023/2024
  • Exam (elaborations)
  • Questions & answers
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ACG 3401 Examlet 2
Chapter 8

What are the threats to an accounting information system? - ANS-Natural and Political Disasters

Software Errors and Equipment Malfunctions

Unintentional acts

Intentional Acts

Natural and political disasters - ANS-- fire or excess heat
- floods, earthquakes, landslides, hurricane, tornadoes, blizzards, snowstorms, and freezing rain
- war and attack by terrorist

Software errors and equipment malfunctions - ANS-operation system crashes, hardware
failures, power outages and fluctuations, and undetected data transmission errors

Unintentional Acts - ANS-Accidents caused by human carelessness, failure to follow established
procedures, and poorly trained or supervised personnel

Intentional acts - ANS-computer crime, a fraud, or sabotage, which is deliberate destruction or
harm to a system

What is the definition of fraud? - ANS-deliberate act or untruth intended to obtain unfair or
unlawful gain.

To be considered fraudulent, an act must involve what? - ANS-A false statement (oral or in
writing) about a material fact

Knowledge that the statement was false when it was uttered (which implies an intent to decieve)

A victim relies on the statement, takes action, and suffers injury or loss as a result

What are some examples of fraud? - ANS-Bribery and Corruption, Investment Fraud (Ponzi
schemes), Insurance Fraud

What are the two main types of business fraud? - ANS-Misappropriation of Assets (employee
fraud)

Fraudulent Financial Reporting (management fraud)

, What and why does misappropriation of assets happen? - ANS-- theft of company's assets by
employees

- gains trust of upper management, sees how easy it is to gain people's trust and fraud the
business, they depend on the extra money, addiction, social standards, etc.

What are the common approaches to "cooking the books"? - ANS-Recording fictitious revenues

Recording revenues prematurely

Recording expenses in later periods

Overstating inventories

Concealing losses or liabilities

What is the company's responsibility to reduce fraudulent financial reporting according to the
Treadway Commission's four actions? - ANS-1. Establish an organizational environment that
contributes to the integrity of the environment

2. Identify and understand the factors that lead to financial fraudulent financial reporting

3. Assess the risk of the financial fraudulent financial reporting

4. Design and implement internal controls to provide reasonable assurance of preventing
fraudulent financial reporting

What is the auditor's responsibility to detect fraud, according to AU-C Section 240? -
ANS-Understand Fraud

Discuss the risks of material fraudulent misstaments

Obtain information

Identify, assess, and respond to risks

Evaluate the risks of their audits tests

Document and communicate findings

Incorporate a technology focus

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