Which of the following conditions found during the audit enhances the likelihood of dishonest behavior on the part of employees? Items in stock with a relatively low quantity yet a significant price tag.
When fraud risk factors are identified during an audit?
During an audit, if fraud risk indicators are discovered, the auditor’s paperwork has to contain The Variables Identified as Posing Risk The Response of the Auditor to the Risk Factors That Were Identified
What must auditors assess on every audit and respond to?
C.The findings of the examinations of the controls D.Questioning of management as well as other individuals.In every audit, auditors are required to evaluate the potential for fraud and take action in response to any risks that are found.Which one of the following is not an example of a method that is necessary to further mitigate the risk of fraud caused by management overriding internal controls?
What are the risks associated with auditing?
The utmost honesty in administration There is a possibility that the auditor will miss important inaccuracies in the financial statements throughout the course of the audit. When it comes to reducing the likelihood of this risk, the auditor will mostly rely on
What is the Auditor’s interest in fraud?
D. Despite the fact that auditors have to be aware of the danger of fraud, it is management’s responsibility to uncover any instances of fraud, not the auditor’s. a. The auditor is interested in taking fraud into consideration when it comes to fraudulent conduct that result in a substantial misrepresentation of financial statements. 22.
Which of the following is most likely to be an overall response to fraud risk identified in an audit?
Which of the following is most likely to be an overall reaction to fraud concerns that have been detected during an audit? Use less predictable audit processes.
What conditions generally exist when fraud occurs by management?
3 Risk variables that pertain to false statements resulting from the theft of assets may also be categorized according to the three circumstances that are often present when fraud occurs. These conditions include incentives/pressures, opportunities, and attitudes/rationalizations.
Which of the following factors most likely would cause an auditor to decline a new audit engagement?
Which of the following reasons would have the most impact on an auditor’s decision to turn down a new audit engagement? The management team was unable to meet the requirements necessary to conduct an audit.
Which of the following circumstances is most likely to cause an auditor to consider whether a material misstatement exists?
Which of the following scenarios is most likely to prompt an auditor to question whether or not a substantial misrepresentation does in fact exist? The transactions that have been chosen for testing do not have the appropriate documentation to support them.
Which of the following is most likely to be a response to the auditor’s assessment that the risk of material misstatement due to fraud for the existence of inventory is high?
What is the most likely course of action that will be taken in response to the auditor’s conclusion that there is a significant risk of making a material misrepresentation due to fraud about the presence of inventory? Make unannounced visits to a few different places to conduct test counts of the merchandise there.
Which of the following types of risk increases when an auditor performs substantive analytical audit procedures for financial statement accounts at an interim date?
Make a decision that the audit risk can be up to forty percent. tests. Which of the following categories of risks is increased when substantial analytical audit procedures for financial statement accounts are performed at an interim date by an auditor? Sampling.
What is fraud risk in auditing?
Events or circumstances that imply an incentive or motivation to conduct fraud or that create a chance to commit fraud are referred to as fraud risk factors. Over example, the payment of a significant bonus in the event that profit goals are missed for a period of one year or more The existence of significant bank accounts held in nations known for their lax taxation.
Why do employees commit fraud?
Donald Cressey, a well-known criminologist, conducted research that demonstrated that people are more likely to commit fraud when a combination of three elements are present. These factors are 1) pressure, 2) opportunity, and 3) justification.
What are the types of frauds in auditing?
- Documentary or archival material that has been subjected to manipulation, fabrication, or change. The theft or misappropriation of property. Omission of transactions from records, as well as their suppression. 5.1 Theft of funds by embezzlement or other illegal means
- 5.2 The Unauthorized Removal of Goods
- 5.3 Falsely Manipulating Accounts for Financial Gain
- 5.4 Teeming & Lading
- 5.5 Window Dressing
Which of the following factors would most likely influence the form and extent of the auditor’s documentation of an entity’s internal control environment?
The form and breadth of the auditor’s documentation of an entity’s internal control environment will most likely be shaped and determined by the level of complexity and scale of the business being audited.
Which of the following circumstances would most likely would cause an auditor to believe that material misstatements may exist in a financial statement?
Which of the following scenarios is most likely to lead an auditor to the conclusion that substantial misstatements may be present in the financial statements of an entity? The number of answers to requests for confirmation of accounts receivable is much lower than anticipated.
Which of the following factors most likely would lead a CPA to conclude that a potential audit engagement should be rejected?
The correct answer is choice (b). A certified public accountant (CPA) is not allowed to offer an opinion on a company’s financial statements before gathering sufficient acceptable audit data to support that view. If such proof was highly unlikely to be obtained, the certified public accountant (CPA) would almost certainly turn down the possible audit contract.
Which of the following circumstances is most likely to cause an auditor to increase the assessment?
Which of the following situations is the one that will most likely prompt an auditor to elevate the assessment of the risk of substantial falsification of the financial statements due to fraud? There are peculiar inconsistencies between the records kept by the entity and the confirmation answers.
Which characteristics would concern an auditor about the risk?
- During the risk assessment process, auditors look at the following potential dangers: Fraud risk.
- Risks associated with the economy, with accounting, or with other aspects of development
- Complex transactions.
- Transactions of significant importance involving associated parties
- The extent to which measurement is subject to subjectivity
- Non-routine transactions
When an auditor increases the assessed level of risk?
When an auditor decides to enhance the anticipated assessed level of control risk because some control activities were found to be ineffective, the auditor will most likely increase the amount to which substantive tests of details are performed.