ACG 445 Final Exam | Questions with Verified Answers
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Module
ACG 445
Institution
ACG 445
ACG 445 Final Exam | Questions with Verified Answers Which of the following is NOT something external auditors are expected to do in looking for fraud? A. Considering audit risk and materiality B. Evaluating management's commitment to serve the public interest C. Assessing the control environmen...
Which of the following is NOT something external auditors are expected to do in looking
for fraud?
A. Considering audit risk and materiality
B. Evaluating management's commitment to serve the public interest
C. Assessing the control environment of the organization
D. Evaluating internal controls
If the financial statements are not materially misstated, the auditor should give a(an):
A. Unmodified opinion
B. Qualified opinion
C. Modified opinion
D. Adverse opinion
An example of fraudulent financial statements is:
A. Failure to provide adequate documentation to support financial statements
B. Misrepresentation of events, transactions, and other significant events in the financial
statements
C. Aggressive accounting for transactions, events, or other significant matters
D. Misappropriation of assets
Misstatements in the financial statements can result from:
A. Illegal acts improperly recorded
B. Fraud
C. Errors
D. All of the above
Misstatements in the financial statements are most likely to occur when there are:
A. Omission of notes to the financial statements
B. Failure to disclose major estimates made in the financial statements
C. Omission of the auditor's report
D. Failure to disclose major judgments made in the financial statements
The auditor's responsibility with regard to illegal acts is greatest when:
,A. The illegal acts have a direct and immaterial effect on financial statement amounts
B. Illegal acts exist regardless of the effects on the financial statements
C. The illegal acts have an indirect and material effect on financial statement amounts
D. The illegal acts have a direct and material effect on financial statement amounts
The first step for an auditor who concludes an illegal act exists is to:
A. Bring the matter to the attention of the SEC
B. Assess the impact of the illegal act on the auditor's opinion
C. Assess the impact of the illegal act on the financial statements
D. Bring the matter to the attention of the audit committee
An auditor concludes that a client has committed an illegal act that has not been
properly accounted for or disclosed. The auditor is most likely to withdraw from the
engagement when the:
A. Client refuses to take the remedial steps deemed necessary by the auditors
B. Auditor is precluded from obtaining sufficient competent evidence about the illegal
act
C. Illegal act has an effect on the financial statements that is both material and direct
D. Auditor cannot reasonably estimate the effect of the illegal act on the financial
statements
The Private Securities Litigation Reform Act imposes additional requirements on public
companies reporting to the SEC and their auditors when:
A. The failure to correct for the action is reasonably expected to warrant a departure
from the standard audit report
B. Senior management and the board have not acted properly to correct for the act
C. The illegal act has a material effect on the financial statements
D. All of the above are additional requirements
Auditors are responsible to detect and correct errors when they are:
A. Material
B. Due to an illegal act
C. Management fails to correct for the error
D. Material or immaterial
Confidential client information can be disclosed outside the entity without violating the
AICPA Code of Professional Conduct in each of the following situations except when:
A. It is to comply with the Private Securities Litigation Reform Act
B. It is allowed for under the Dodd-Frank Financial Reform Act
C. It is reported to the SEC under Section 10A of the Securities Exchange Act
D. It protects the auditor's accounting for fraud and illegal acts
, The purpose of the fraud triangle is to identify:
A. The causes of when there is a lack of independence in performing an audit
B. The causes of when the audit opinion should be qualified
C. The causes of illegal acts
D. The causes of and reasons for fraud when there may be intentional misstatements or
omissions of amounts or disclosures in the financial statements
The difference between errors in the financial statements as compared to fraud is:
A. Fraud is always an intentional act designed to deceive another party
B. An error is always an intentional act designed to deceive another party
C. An error always leads to a qualification of the auditors' opinion
D. Fraudulent financial reporting is always material in amount
Which of the following is NOT a pressure that might lead to fraud?
A. Desire to maximize the value of stock options
B. Meet financial analysts' earnings expectations
C. Budget pressures
D. Ability to carry out the fraud
All of the following are in a position to commit fraud except:
A. External auditors who audit the financial statements
B. Top management who can override internal controls
C. Employees who have access to assets
D. All of the above are in a position to commit fraud
All of the following tend to be rationalizations for fraud except:
A. All companies use aggressive accounting techniques
B. The employee will be fired unless s/he goes along with the fraud
C. We are correcting a temporary problem that will not exist in the future
D. We need to protect the shareholders and keep the stock price high
The best explanation why the fraud at Tyco was not discovered and acted on is:
A. The fraud was not material
B. Failure of the corporate governance system
C. Tyco management hid the fraud from the auditors
D. External auditors told management to let the fraud go
Which of the following elements were NOT part of the fraud at Tyco?
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