The Statement of Auditing Standards (SAS) No 1 states (select the most correct answer) - management is
responsible for adopting sound accounting policies and for establishing and maintaining internal control
consistent with management's assertions embodied in the financial statements.
In a collusive environment - internal and external auditors must design procedures to detect such
activity
In searching for breakdowns of internal controls by collusion and fraud, auditors - should obtain an
understanding of the internal control processes regarding journal entries and other adjustments
With regard to the review of accounting estimates - prior years' estimates should be examined for
consistency
The public perception of independent auditors, particularly with regard to asset misappropriation,
corruption, and misstated financial statements, is that - independent auditors are responsible for fraud
detection
An auditor's opinion of - "unqualified" indicates that the independent auditors believe the financial
statements presented by management are fairly presented
As a result of its significant concern with financial statement fraud, the accounting profession responded
in 2002 with - SAS No. 99 - Consideration of Fraud in a Financial Statement Audit
SAS No. 99 lists several steps in considering the risk of fraud in a financial statement audit. All of the
following are correctly stated except: - Auditors must brainstorm with the key personnel of both the
internal and independent audit teams to plan a strategy to detect fraud
Materiality is relative. As such - the type of account and its related financial statement plays an
important role in materiality
, Audit committees generally have the right to all of the following except - take testimony of employees
under oath
As related to operations, the internal auditors evaluate: - All of the choices are correct
Upon discovering fraud, internal auditors - have an obligation to notify management or the board of
directors when the incidence of significant fraud has been established to a reasonable degree of
certainty
Anomalies are - part of the day-to-day operations for most companies
Red flags, symptoms of fraud, often go unnoticed or are not vigorously pursued because: - there are
many red flags in day-to-day operations that are not fraud indicators
The first step to detecting fraud is to: - Build an understanding of the organization in the environment in
which it operates
The second step to develop an approach to fraud detection is to: - develop an understanding of the
control environment.
Some of the analytical anomalies include all of the following except - explained cash shortages
Red flags indicating predication include: - None of the above
Which of the following is NOT an attribute of M.I.C.E. - Motive
What is the accepted definition of evidence - None of the above
Which of the following is a legal form of evidence - A conversation between two parties
The defendant has an account at a local bank. As part of the trial, bank statements showing the
defendant made several large cash deposits are admitted. Which type of evidence is this? - Real
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