accounting chapter 5 learnsmart

A weak system of internal ______ provides the ______ to commit fraud.

controls, opportunity

A goal of the Sarbanes-Oxley Act is improving corporations' internal controls. Which of these may accomplish this goal? (Select all that apply.)

External auditors must test the effectiveness of the company's internal controls. An audit committee of independent directors oversees financial matters of the company. Marketing managers must determine whether the marketing team is submitting accurate sales and expense report

Among the requirements of SOX is those who commit fraud face ______. (Select all that apply.)

stiff fines of up to $5 million plus repayment of fraud proceeds possible jail time up to 20 years for each violation

Some managers commit fraud because they are under great pressure to report a high net income to meet ______. (Select all that apply.)

shareholders' expectations financial analysts' earnings forecasts loan covenant requirements

of duties is essential for safeguarding assets. The person who has custody of an asset should not also account for the asset. A person who performs both duties can steal the asset and hide the theft by making a bogus entry in the accounting records. (Enter one word per blank.)

segregation.

is one of the 3 fraud triangle components where the fraudsters perceive the misdeed is unavoidable or justified. (Enter only one word per blank.)

Rationalization

What are reasons internal controls can never completely prevent and detect errors and fraud? (Select all that apply.)

Collusion Costs exceed benefits Human error

The Sarbanes-Oxley Act (SOX) contains measures aimed at reducing both opportunities and incentives to commit fraud. Which of the following are designed to reduce the opportunity for fraud? (Select all that apply.)

Internal control report from management Internal control audit by external auditors Stronger oversight by directors

Which parts of the Sarbanes-Oxley (SOX) Act may encourage employees to be honest? (Check all that apply.)

Providing legal protection to whistle-blowers Requiring anonymous tip lines Requiring a code of ethics

Which principles of internal control are incorrectly described? (Select all that apply.)

Restrict access - prepare documents that show activities that have occurred Document procedures - do not provide access to assets or information unless it is needed to fulfill the assigned task

Cashiers at a supermarket have to talk to a manager before approving price changes at the register. Which internal control principle is being followed?

Segregate duties

The quality of financial reporting for publicly traded companies is improved through ______. (Check all that apply.)

a. evaluating and reporting on the effectiveness of internal controls c. obtaining an external audit

Which of the following poses a high risk of theft because of its high volume and ease of portability?

cash

Anonymous information about questionable accounting matters sent to the audit committee through tip lines ______.

decrease the risk of fraud

Each cash drawer is assigned to only one employee in a supermarket. This is an example of the internal control principle of ______.

establishing responsibiliy

Employee________ is often grouped into 3 categories: corruption, asset misappropriation, financial statement fraud. (Enter only one word per blank.)

fraud

The benefits of internal control procedures are that they ______. (Check all that apply.)

improve the efficiency and effectiveness of operations enhance the reliability of accounting information protect against theft of assets

Fraudulent reporting by management includes ______.

misreporting revenues and expenses

Which component of the fraud triangle is exemplified best by an employee being able to steal because no documentation is required for amounts taken from the petty cash?

opportunity

system consists of actions taken to promote efficient and effective operations, protect assets, enhance accounting information and adhere to laws and regulations. (Enter only one word per blank.)

internal control

The Sarbanes-Oxley (SOX) Act provides increased regulations for ______. (Select all that apply.)

internal controls auditors corporate executive