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C. An Unreliable Accounting System

This document contains 9 multiple choice questions about auditing. The questions cover topics such as: 1) risk factors for misappropriation of assets, 2) what should not be included in an engagement letter, 3) which audit procedures are least likely to be completed before the balance sheet date, 4) what information should be obtained from predecessor auditors, 5) the primary objective of substantive procedures, 6) what detection risk refers to, 7) the definition of a fraud risk factor, 8) what is not one of the three conditions generally present when fraud occurs, and 9) which is most likely to be an overall response to identified fraud risks.

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167 views2 pages

C. An Unreliable Accounting System

This document contains 9 multiple choice questions about auditing. The questions cover topics such as: 1) risk factors for misappropriation of assets, 2) what should not be included in an engagement letter, 3) which audit procedures are least likely to be completed before the balance sheet date, 4) what information should be obtained from predecessor auditors, 5) the primary objective of substantive procedures, 6) what detection risk refers to, 7) the definition of a fraud risk factor, 8) what is not one of the three conditions generally present when fraud occurs, and 9) which is most likely to be an overall response to identified fraud risks.

Uploaded by

Glaizza
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Multiple Choice Questions AUDITING

CHAPTER 9

1. In planning and performing an audit, auditors are concerned about risk factors for two distinct types of
fraud: fraudulent financial reporting and misappropriation of assets. Which of the following is a risk factor
for misappropriation of assets?

a. Generous performance-based compensation systems.

b. Management preoccupation with increased financial performance.

c. An unreliable accounting system.

d. Strained relationships between management and the auditors.

2. Which of the following should not normally be included in the engagement letter for an audit?

a. A description of the responsibilities of client personnel to provide assistance.

b. An indication of the amount of an audit.

c. A description of the limitations of an audit.

d. A listing of the client's branch offices selected for testing.

3. Which portion of an audit is least likely to be completed before the balance sheet date?

a. Test of controls.

b. Issuance of an engagement letter.

c. Substantive procedures.

d. Assessment of control risk.

4.Which of the following should the auditor obtain from the predecessor auditors before accepting an audit
engagement?

a. Analysis of balance sheet accounts.

b. Analysis of income statement accounts.

c. All matters of continuing accounting significance.

d. Facts that might bear on the integrity of management.

5. The primary objective of tests of details of transactions performed as substantive procedures is to:

a. Comply with generally accepted auditing standards.

b. Attain assurance about the reliability of the accounting system.

c. Detect material misstatements in the financial statements.

d. Evaluate whether management's policies and procedures are opening effectively.

6. The risk that the auditor will conclude, based on substantive procedures, that a material misstatement
does not exist in an account balance when, in fact, such misstatement does exist is referred to as

a. Business risk c. Control risk


b. Engagement risk d. Detection risk

7. Which of the following best describes what is meant by the term "fraud risk factor"?

a. Factors that, when present, indicate that risk exists.

b. Factors often observed in circumstances where frauds have occurred.

c. Factors that, when present, require modification of planned audit procedures.

d. Weakness in internal control identified during an audit.

8. Three conditions generally are present when fraud occurs. Select the one below that is not one of those
conditions.

a. Incentive or pressure c. Supervisory position

b. Opportunity d. Attitude

9. Which of the following is most likely to be an overall response to fraud risks identified in an audit?

a. Supervise members of the team less closely and rely more upon judgment.

b. Use less predictable audit procedures.

c. Use only certified public accountants on the engagement.

d. Place increased emphasis on the audit of objective transactions rather than subjective transactions.

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