Chapter 6

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

An unreliable accounting system

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

Detect Material misstatements in the financial statements

The risk that the auditors 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

Detection Risk

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

Factors often observed in circumstances where frauds have occurred

Which of the following elements underlies the application of generally accepted auditing standards, particularly the standards of fieldwork and reporting?

Materiality and audit risk

The audit committee of a company must be made up of:

Members of the board of directors who are not officers

as one step in testing sales transactions, a CPA traces a random sample of sales journal entries to debits in the accounts receivable subsidiary ledger. This test provides evidence as to whether:

Recorded sales have been properly posted to customer accounts

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

Substantive procedures

Three conditions generally are present when fraud occurs. Which is not one of these conditions

Supervisory Position

Which of the flooding is most likely to be an overall response to fraud risks identified in an audit

Use less predictable audit procedures

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

a listing of the client's branch offices selected for testing

Which of the following should the auditors obtain from the predecessor auditors before accepting an audit engagement

facts that might bear on the integrity of management