Final Study Guide: Modules 1-22
Based on the following information, is the control working effectively? Sample size - 80 Actual number of deviations found - 1 Tolerable deviation rate - 5% Confidence level - 90% Yes No
Yes
Which type of sampling should be used to test controls? a- Attribute b- Discovery c- Stop and Go d- Variable
a- Attribute
Sequential numbering of purchase requisitions, purchase orders, and receiving reports provides evidence for all of the following management assertions EXCEPT: a- Classification b- Completeness c- Uniqueness d- Occurrence
a- Classification
Which of the following bid rigging schemes does not involve an employee of the organization? a- Collusive bidding through bid pooling b- Customized specifications c- Losing bids from competitors d- Accepting bids after deadline
a- Collusive bidding through bid pooling
Which of the following types of audit procedures is NOT designed to assess bank deposit skimming or larceny? a- Compare ending bank reconciliation to balance per books b- Observe cash deposit process to assess whether or not the process is in compliance with the segregation of duties chart c- Investigate deposits in transit that do not clear the bank on the following bank business day d- Review proof of cash for cash receipts and cash disbursements that are not recorded in the organization records
a- Compare ending bank reconciliation to balance per books
Which is the most important management assertion for cash receipts? a- Completeness b- Classification c- Authorization d- Occurrence
a- Completeness
Which is the most important component of internal control? a- Control Environment b- Control Activities c- Monitoring d- Risk Assessment e- Information and Communication
a- Control Environment
All of the following are examples of authorization audit procedures EXCEPT: a- For a sample of cash disbursements, inspect supporting invoices for "paid" stamp b- Analyze checks for payments to same vendor within one week where combined amounts exceed check authorization limit c- Inspect cancelled checks for authorized signatures d- For cash disbursements over $5,000, inspect cancelled checks for two authorized signatures
a- For a sample of cash disbursements, inspect supporting invoices for "paid" stamp
Which audit procedure attempts to identify bid rigging that does not include an employee of the company? a- Identify patterns of predictable bid rotation among bid awardees b- Assess the adequacy of the number of vendors who can satisfy specifications c- Compare bids awarded to bid opening log d- Identify and examine all change orders for reasonableness, especially from same contractors
a- Identify patterns of predictable bid rotation among bid awardees
Which of the following procedures best prevents interception of checks? a- Immediate delivery of check to payee after signing b- Locking checks in cabinet until delivery c- Waiting for vendor to contact company before sending check d- Mailing checks the following business day
a- Immediate delivery of check to payee after signing
Which of the following controls do not create awareness that bribery, illegal gratuities, extortion, and unapproved conflict of interest are prohibited? a- Independent reviews b- Written policies c- Certifications by employees d- Fraud training
a- Independent reviews
All of the following are key audit procedures for authorized maker schemes EXCEPT: a- Inspect cancelled checks for authorized endorsements b- Analyze cash disbursements for checks made payable to cash or in the name of the organization c- Review segregation of duties chart for individuals performing incompatible duties d- Analyze cash disbursements for checks made payable to cash disbursement custodian
a- Inspect cancelled checks for authorized endorsements
Which of the following is not a normal consequence of kickbacks? a- Lower prices b- Higher prices c- Excessive goods or services received d- Lower quality
a- Lower prices
All of the following are methods for hiding theft for a larceny of sales scheme EXCEPT: a- Not recording the sale b- Altering the cash count c- Altering or destroying cash register tapes d- Replacing stolen cash with false checks
a- Not recording the sale
Before recording an accounts payable, all of the following documents should be matched EXCEPT: a- Packing slips b- Invoice c- Purchase requisitions d- Receiving reports e- Purchase orders
a- Packing slips
What is the major purpose of non-accomplice vendor controls? a- Prevent perpetrator from receiving checks b- Prevent perpetrator from misleading vendors c- Detect perpetrator after misleading vendors d- Detect perpetrator non-accomplice vendor frauds
a- Prevent perpetrator from receiving checks
Purchase requisitions and purchase orders generally should have the same following information EXCEPT: a- Price b- Quantity requested c- Item specifications d- Required delivery date
a- Price
Which is the correct process order for generating purchasing documents? a- Purchase requisition, purchase order, receiving report b- Purchase requisition, receiving report, purchase order c- Receiving report, purchase requisition, purchase order d- Purchase order, purchase requisition, receiving report e- Receiving report, purchase order, purchase requisition
a- Purchase requisition, purchase order, receiving report
All of the following are parameter authorizations EXCEPT: a- Purchase requisitions b- Purchasing policies c- Supplier lists d- Purchasing limits
a- Purchase requisitions
Which of the following is a detection control? a- Reconciling bank statement b- Signing check c- Authorizing disbursement d- Recording disbursement
a- Reconciling bank statement
The most important audit procedure to evaluate the prevention of authorized maker schemes is a- Review segregation of duties chart for individuals performing incompatible duties. While reviewing approvals, compare to segregation of duties chart. b- Analyze cash disbursements for checks made payable to cash or in the name of the organization c- Analyze cash disbursements for checks made payable to cash disbursement custodian, his/her relatives, significant others, or other related parties or for their personal benefit d- For a sample of cash disbursements, inspect cancelled checks for authorized signatures
a- Review segregation of duties chart for individuals performing incompatible duties. While reviewing approvals, compare to segregation of duties chart.
The board generally approves all of the following EXCEPT: a- Routine purchase orders b- Purchase authorization limits c- Purchasing policies d- Designates who can approve purchases up to purchase authorization limits
a- Routine purchase orders
According to the heat maps, which fraud scheme has the highest inherent risk? a- Shell Company b- Personal Purchases with Credit Cards c- Personal Purchases with Purchase Orders d- Non-Accomplice Vendor
a- Shell Company
Which document should be sampled to determine whether or not sales are recorded in the proper period? a- Shipping documents b- Sales invoices c- Receiving documents d- Sales orders e- Purchase orders
a- Shipping documents
If an auditor notices a decrease in gross margin over time, it could indicate a- Skimming of sales b- Decrease in cost of goods sold c- Larceny of sales d- Larceny of deposits
a- Skimming of sales
Severely limiting the time someone has to bid on a contract is a form of which type of bid rigging? a- Solicitation manipulation b- False specifications c- Award manipulation d- Submission manipulation
a- Solicitation manipulation
Which of the following is not a benefit of a proof of cash? a- Uncovers incorrectly recorded interbank transfers b- Auditor can trace cash receipts and cash disbursements directly to respective journals c- Provides a separate reconciliation of cash receipts and cash disbursements d- Helps detect unrecorded cash receipts and cash disbursements
a- Uncovers incorrectly recorded interbank transfers
Which is the best control to detect endorsement forgeries? a- Vendor payment complaints investigated by someone independent of purchasing, accounts payable, or cash functions b- Cancelled checks are examined for matching payee, amount, signature, and endorsement c- All checks are completely filled in with permanent ink and copied before signing and prompt delivery d- Organization investigates out-of-sequence or duplicate checks on bank statement
a- Vendor payment complaints investigated by someone independent of purchasing, accounts payable, or cash functions
All of the following should be included in the introductory paragraph of a memo EXCEPT: a- What should be done with the findings? b- Why are the assessment findings important? c- Who did the assessment? d- What did the assessment find? e- When and where did the assessment occur?
a- What should be done with the findings?
When considering the needs of your audience, writing should answer all of the following questions EXCEPT: a- Who is to blame? b- Why should I do it? c- How should I do it? d- What should I do? e- What is the problem?
a- Who is to blame?
Recording the numbers of the last receiving report and shipping document provide evidence for all of the following management assertions EXCEPT: a- Valuation b- Completeness c- Existence d- Rights
d- Rights
Which is not a risk response of Enterprise Risk Management (ERM)? a- Share or transfer b- Align mission with risk appetite c- Accept d- Eliminate or avoid e- Reduce
b- Align mission with risk appetite
What is the foremost consideration for effective communication? a- Process b- Audience c- Results d- Format
b- Audience
Which of the following types of fraud would most likely be perpetrated by someone outside the organization? a- Blank checks are not safeguarded with passwords b- Checks created and forged resulting in duplicate or out-of-sequence checks c- Voided checks are altered and forged d- Blank checks are not locked in cabinets
b- Checks created and forged resulting in duplicate or out-of-sequence checks
Which of the following management assertions for internal controls over financial reporting is least related to the management assertions for financial statements and note to financial statements? a- Occurrence-Existence b- Classification-Rights and Obligations c- Completeness-Completeness d- Uniqueness-Existence
b- Classification-Rights and Obligations
Audit planning includes all of the following EXCEPT: a- Document scope, timing, and budget of audit b- Complete purchasing cycle control questionnaire c- Brainstorm to identify areas most susceptible to fraud or errors d- Review prior purchasing audit programs and audit report
b- Complete purchasing cycle control questionnaire
Gaps in the numerical sequence of documents may indicate a lack in the area of which of the following management assertions. a- Uniqueness b- Completeness c- Cutoff d- Occurrence
b- Completeness
What is the best type of evidence to evaluate existence of accounts receivable? a- Reperformance b- Confirmation c- Interviews d- Observation e- Tracing
b- Confirmation
All of the following are transaction authorizations EXCEPT: a- Purchase orders b- Contractor authorization c- Payment authorization d- Purchase requisitions
b- Contractor authorization
Which of the following in NOT an inherent limitation of internal control? a- Controls may break down due to misunderstanding, carelessness, or fatigue b- Control benefits always exceed costs c- Human judgment is faulty d- Management may override controls e- Circumvention of controls through collusion
b- Control benefits always exceed costs
The main reason the inherent risk impact is higher for personal purchases with purchase orders than with personal purchases with credits cards is because: a- Credit cards are harder to use than purchase orders b- Credit cards do not require multiple approvals like purchase orders c- Credit cards have lower authorization limits than purchase orders d- Credit cards are more likely to be stolen than purchase orders
b- Credit cards do not require multiple approvals like purchase orders
According to proper segregation of duties, shipping and receiving clerks are considered: a- Transaction authorizers b- Custodians c- Reviewers d- Recorders
b- Custodians
According to COSO's "Internal Control - Integrated Framework," control environment factors include all of the following EXCEPT: a- Management's Philosophy and Operating Style b- Establishment of Objectives c- Attention and Direction Provided by Board of Directors d- Assignment of Authority and Responsibility e- Integrity and Ethical Values
b- Establishment of Objectives
The auditor should test for all of the following for shell companies EXCEPT: a- Examine invoices with P.O. Box numbers or residential addresses b- Examine purchase order for correct item description, quantity, and price c- Examine invoices with lack of details: invoice numbers, telephone numbers, tax identification numbers d- Match vendor master file with employee master file for address, telephone numbers, and tax identification numbers
b- Examine purchase order for correct item description, quantity, and price
The most important financial reporting management assertions for inventory are a- Existence and Presentation b- Existence and Valuation c- Completeness and Valuation d- Completeness and Presentation
b- Existence and Valuation
Why would an auditor want to identify bid organizations that have the same address, phone number, contract person, or whose bids have the same sub-quote or errors? a- Identify false specifications requiring later price modification b- Identify false bids from fictitious suppliers c- Identify improperly advertised bids d- Identify collusive bidding through bid pooling
b- Identify false bids from fictitious suppliers
All of the following controls attempt to prevent reducing the number of bids considered for award EXCEPT a- Prohibit customized specifications to eliminate bidders b- Independent review looking for specification splitting c- Record and track all bid submissions in a bid submission log and store bids in a secure location d- Prohibit sole source or limited source contractors
b- Independent review looking for specification splitting
The most important audit test for detecting alteration forgeries is a- Observe vendor complaint process b- Inspect cancelled checks for matching payee and amount c- Analyze bank statements for out of sequence or duplicate checks d- Evaluate the adequacy of security of blank checks
b- Inspect cancelled checks for matching payee and amount
The major objective of most bid splitting schemes is a- Extortion b- Limiting or eliminating competitive bids c- Illegal Gratuities d- Unapproved conflict of interest
b- Limiting or eliminating competitive bids
What is the most important purpose for communication? a- Summarize your audit steps b- Move your audience to action based on your recommendations c- Persuade your audience to believe in your recommendation d- Present your arguments
b- Move your audience to action based on your recommendations
What is the best type of audit procedure? a- Interviews b- Observation c- Record examination d- Confirmation e- Reperformance
b- Observation
Which of the following observation procedures looks for possible duplication of inventory counts? a- Observe recounted items to assure correctness b- Observe any movement of inventory during the count c- Observe inventory that may appear damaged or obsolete d- Open boxes for tested items
b- Observe any movement of inventory during the count
All of the following are types of non-accomplice vendor schemes EXCEPT: a- Overbills organization, then requests a refund from vendor and steals refund Correct! b- Pays wrong vendor, then requests return of payment or refund and deposits it in employer organization's bank account c- Double pays vendor, then requests return of second payment or refund and steals it d- Submits counterfeit invoice then steals check or has it delivered to perpetrator's mail box
b- Pays wrong vendor, then requests return of payment or refund and deposits it in employer organization's bank account
In order to test for authorized vendors, the auditor should do all of the following EXCEPT: a- Review the authorized vendor list with the authorizers to verify the vendors on the list b- Trace the vendors on approved purchase orders to the authorized vendors list c- Trace the vendors on the authorized vendor list to approved purchase orders d- Match the current year's approved vendor list to the prior year's approved vendor list to identify new vendors
b- Trace the vendors on approved purchase orders to the authorized vendors list
Investigating out-of-sequence or duplicate checks helps detect which type of fraud? a- Authorized maker checks b- Unauthorized checks c- Forged endorsements d- Altered checks
b- Unauthorized checks
Collusive bidding controls include all of the following EXCEPT: a- Analyze bids for pattern of rotation for bid awardees b- Verify existence of all bidders c- Prohibit use of subcontractors who bid on main contract d- Prohibit the use of sales representatives who represent multiple bidders
b- Verify existence of all bidders
What is the most important detection control for sales skimming? a- Cash register tape copied electronically by system b- Visibly post notice to customers for free or discounted goods or services if they do not receive a sales receipt c- Security cameras and frequent visible and covert monitoring of sales transactions d- Require employees to give receipts for all sales to customers
b- Visibly post notice to customers for free or discounted goods or services if they do not receive a sales receipt
All of the following should be included in the problem paragraph of a memo EXCEPT: a- When and where did the problem occur? b- What are recommendations to address the problem? c- Why is the problem important? d- What was the problem? e- Who was involved in the problem?
b- What are recommendations to address the problem?
Which of the following is the most important control for preventing payments to shell companies? a- Identify invoices and checks paid to unapproved vendors b- Periodically check existence and independence of suppliers by management independent of purchasing function Correct! c- Approve authorized supplier list by management independent of purchasing function d- Analyze unusual invoices paid to vendors
c- Approve authorized supplier list by management independent of purchasing function
After the organization identifies events that may impact organizational objectives, the next step is to a- Assess risk responses for the event b- Design risk responses for the event c- Assess impact of the event d- Assess likelihood of the event
c- Assess impact of the event
Which of the following steps is not part of the confirmation process for cash balances? a- Auditor uses the "Standard Form to Confirm Account Balance Information with Financial Institutions" b- The mailed envelope included a stamped envelope addressed directly to the auditor c- Authorized signor mails the confirmation d- The authorized signor signs the form in the presence of the auditor
c- Authorized signor mails the confirmation
One of the most important assertions for cash receipts is a- Classification b- Occurrence c- Completeness d- Uniqueness
c- Completeness
Auditors should review credit card statements for all of the following EXCEPT: a- Adequate documentation b- Proper review authorization c- Delivery addresses d- Business purpose
c- Delivery addresses
Enterprise Risk Management (ERM) attempts to maximize value in all of the following areas EXCEPT: a- Helps ensure effective reporting b- Helps avoid damage to reputation c- Eliminates organizational uncertainty d- Helps strike an optimal balance between growth and return goals and related risks e- Helps ensure compliance with laws and regulations
c- Eliminates organizational uncertainty
Incorrectly recording a current period expense as inventory or equipment represents which type of key risk? a- Not accurate b- Improper cutoff c- Improper classification d- Not occurred
c- Improper classification
In order to test for non-accomplice vendors, the auditors should test all of the following EXCEPT: a- Match address for cash disbursements with addresses on invoices and authorized vendor list b- Match current year approved vendor's addresses with prior year approved vendor's addresses to identify address changes. Address changes traced to authorization c- Match invoice with purchase requisition, purchase order, and receiving report d- Match invoice paid addresses to approved vendor addresses
c- Match invoice with purchase requisition, purchase order, and receiving report
Which of the following is not a compatible function and therefore should be segregated from the other three? a- Approves authorized limits for checks b- Approves authorized signers on bank account c- Matches documentation and approves disbursements d- Approves cash disbursement policies
c- Matches documentation and approves disbursements
All of the following are methods for hiding larceny of accounts receivable thefts EXCEPT: a- Making unauthorized adjustment to customer account b- Making unauthorized adjustment to general ledger c- Not posting receipt to customer account d- Destroying records
c- Not posting receipt to customer account
The most important audit procedure to evaluate the prevention of intercepted checks-alteration and endorsement forgeries is a- Read vendor payment complaint policies/processes and observe vendor payment complaint process to assess appropriate segregation of duties b- For a sample of cash disbursements, compare cancelled check to cash disbursements journal for matching payee and amount. Also, inspect for authorized signature and endorsement c- Observe check creation and delivery process d- Analyze bank statements for out of sequence or duplicate checks
c- Observe check creation and delivery process
Which of the following type of objectives are within the organization's control? a- Reporting and Strategic b- Strategic and Compliance c- Reporting and Compliance d- Compliance and Operations e- Strategic and Operations
c- Reporting and Compliance
The correct use of inventory tags provides evidence for all of the following management assertions EXCEPT: a- Valuation b- Existence c- Rights d- Completeness
c- Rights
An independent reviewer should look for all of the following red flags of bid rigging EXCEPT: a- Specification splitting b- Customized specifications c- Standard advertising venues d- Complete specifications
c- Standard advertising venues
Which of the following is the most important test of management assertions related to authorization, occurrence, completeness, uniqueness, and accuracy? a- Verify that all recorded items are documented b- Analyze purchase requisitions, purchase order, and receiving reports for out of sequence documents, numerical sequence gaps, and duplicates documents c- Trace invoice paid to purchase requisition, purchase order, and receiving report to match item description, quantity, and price; and verify approval of invoice payment d- Verify that all documents are recorded in the records
c- Trace invoice paid to purchase requisition, purchase order, and receiving report to match item description, quantity, and price; and verify approval of invoice payment
What would the sample size be based on the following factors? Confidence level - 90% Tolerable deviation rate - 5% Expected population deviation rate - 0.00% a- 77 b- 93 c- 59 d- 45
d- 45
Which is not a limitation of Enterprise Risk Management (ERM)? a- Errors, mistakes, or faulty judgment b- Control circumvention by collusion c- Management override d- Absolute assurance of achievement of entity objectives e- Cost verses benefit
d- Absolute assurance of achievement of entity objectives
Which of the following bid rigging strategies does not attempt to reduce competition? a- Customized specifications b- Restricting bids c- Losing bids d- All of the strategies attempt to reduce competition
d- All of the strategies attempt to reduce competition
What is the most important management assertion for larceny using false voids and refunds? a- Completeness b- Occurrence c- Uniqueness d- Authorization
d- Authorization
Why do authorized maker frauds have a higher likelihood of occurring than forgery frauds? a- Authorized makers have more need than forgers to perpetrate the fraud b- Authorized makers have more rationalization than forgers to perpetrate the fraud c- Authorized makers have more ethics than forgers to perpetrate the fraud d- Authorized makers have better opportunity than forgers to perpetrate the fraud
d- Authorized makers have better opportunity than forgers to perpetrate the fraud
Purchasing fraud risks include all of the following EXCEPT: a- Buying goods or services that are non-existent b- Buying goods or services that are overpriced c- Buying goods or services for personal use d- Buying goods or services at market rates
d- Buying goods or services at market rates
Which is not one of the auditor judgments made by auditors to calculate sample size? a- Expected deviation rate b- Confidence level c- Tolerable deviation rate d- Calculated deviation rate
d- Calculated deviation rate
Which of the following is not a forgery scheme? a- Check signed by unauthorized person b- Authentic check altered by unauthorized person c- Endorsement made by unauthorized person d- Check made out to an authorized signer and signed by the authorized signer
d- Check made out to an authorized signer and signed by the authorized signer
Which is not a red flag for authorized maker fraud schemes? a- Checks are made payable to relatives of cash disbursement custodian b- Checks are made payable to cash c- Checks are made payable to cash disbursement custodian d- Checks are altered after signing
d- Checks are altered after signing
Tracing a sample of items in receiving reports to approved purchase orders test all of the following management assertions EXCEPT: a- Authorization b- Completeness c- Occurrence d- Classification
d- Classification
All of the following are methods for stealing recorded deposits EXCEPT: a- Employee steals cash from the deposit and hides the theft by adjusting the records or reconciliation b- Employee steals cash from the deposit and uses deposits in transit to hide the theft c- Employee steals the deposit then hides the theft by replacing it with the following day's deposit d- Employee deposits unexpected receipts then withdraws and steals the amount deposited
d- Employee deposits unexpected receipts then withdraws and steals the amount deposited
What are the primary management assertions for cash balances? a- Completeness and Rights and Obligations b- Existence and Presentation and Disclosure c- Completeness and Valuation d- Existence and Valuation
d- Existence and Valuation
One of your employees told a supplier that your organization would not do business with that supplier any more unless the supplier paid the employee a processing fee. This is an example of: a- Illegal Gratuity b- Bribery c- Kickback d- Extortion
d- Extortion
The main reason for tracing a sample of the day's sales total checks, credit card transactions, and cash transactions to the bank deposit is to assess which risk event? a- Hides the theft by altering the cash count b- Hides cash receipts theft by altering or destroying cash register tapes c- Employee steals cash from registers not assigned to him so the theft cannot be traced to him d- Hides the theft by replacing stolen cash with false checks
d- Hides the theft by replacing stolen cash with false checks
Contingency plans should be made for events for a- Low impact opportunities with a high likelihood of occurring b- High impact opportunities with a high likelihood of occurring c- Low impact threats with a high likelihood of occurring d- High impact threats with a low likelihood of occurring
d- High impact threats with a low likelihood of occurring
Which of the following risks allows the perpetrator to hide the theft in the accounting records? a- Checks made payable to authorized signer b- Lack of matching documentation c- Checks issued payable to cash d- Lack of segregation of duties among those completing checks, recording checks, signing checks, and reconciling bank statements
d- Lack of segregation of duties among those completing checks, recording checks, signing checks, and reconciling bank statements
Audit planning for inventories should include all of the following steps EXCEPT: a- Review prior inventory audit program and working papers b- Brainstorm to identify areas most susceptible to fraud or errors c- Document scope and timing of inventory audit d- Listen to instruction given to inventory counters before inventory counting process beings to assess whether or not the verbal instructions match the written instructions
d- Listen to instruction given to inventory counters before inventory counting process beings to assess whether or not the verbal instructions match the written instructions
What is the most important detection control for accounts receivable skimming? a- Two people open and record all payments received through the mail b- Cash and accounts receivable personnel do not authorize write off of receivables c- Cash and accounts receivable personnel do not have access to general ledger system d- Monthly statements mailed to customers showing payments and payment complaints investigated by independent employee
d- Monthly statements mailed to customers showing payments and payment complaints investigated by independent employee
Auditors search for duplicate payments is aimed mostly at detecting which type of fraud? a- Internal Control Over Financial Reporting b- Personal Purchases c- Shell Companies d- Non-Accomplice Vendors
d- Non-Accomplice Vendors
All of the following overstate net income EXCEPT: a- Understating accounts payable for current period expenses b- Overstating inventory valuations c- Recording inventory that does not exist or is duplicated d- Not recording inventory that does exist
d- Not recording inventory that does exist
What is the most important type of audit procedure to detect skimming? a- Confirmation b- Inspection c- Inquiry d- Observation
d- Observation
Which of the following would not be a segregation of issues problem for someone who accepts cash receipts? a- Adjust the customer account for returns and voids b- Reconcile the bank statement c- Adjust the general ledger d- Record the receipt of cash
d- Record the receipt of cash
The most important control for detecting credit card fraud is: a- Purchases are delivered to organization's delivery addresses b- Authorized signer must provide documentation and business purpose for each purchase c- Credits cards limits set for individual purchases, monthly purchases, and business authorized SIC codes d- Reviewer independent of credit card authorized signer carefully reviews each transaction's documentation for business purpose
d- Reviewer independent of credit card authorized signer carefully reviews each transaction's documentation for business purpose
According to "Internal Control - Integrated Framework," internal control is designed to provide reasonable assurance regarding the achievement of all of the following objectives EXCEPT: a- Effectiveness and efficiency of operations. b- Compliance with applicable laws and regulations c- Reliability of financial reporting d- Safeguarding of assets
d- Safeguarding of assets
A key control to prevent personal purchases with purchase orders is to segregate all of the following authorizations EXCEPT: a- Payment Voucher b- Purchase Order c- Purchase Requisition d- Sales Order
d- Sales Order
What is the risk that the sample does not represent the population? a- Nonsampling risk b- Random risk c- Tolerable deviation risk d- Sampling risk
d- Sampling risk
Which of the following audit procedures best tests whether or not employees know that they are prohibited from engaging in bribery, illegal gratuities, extortion, and unapproved conflict of interest? a- Select a sample of employees and review their conflict of interest statements b- Analyze training log to verify that all employees received training prohibiting bribery, illegal gratuities, extortion, and unapproved conflict of interest c- Read and assess the adequacy of policies prohibiting bribery, illegal gratuities, extortion, and unapproved conflict of interest d- Select a sample of employees and verify that they have signed the annual certification stating that they are not involved in bribery, illegal gratuities, extortion, or unapproved conflict of interest
d- Select a sample of employees and verify that they have signed the annual certification stating that they are not involved in bribery, illegal gratuities, extortion, or unapproved conflict of interest
Which of the following is false about shell companies? a- Shell companies generally register with the state or county so they can open a bank account b- Shell companies usually have a mailing address so they can receive payments c- Shell companies may sell goods to employers at inflated prices, keeping the difference between the shell company's purchase price and sale price as profit d- Shell company schemes generally originate outside the purchasing department
d- Shell company schemes generally originate outside the purchasing department
Before authorizing payments, invoices should be matched to all of the following documents EXCEPT: a- Purchase Order b- Purchase Requisition c- Receiving Report d- Shipping Report
d- Shipping Report
The transaction is not recorded in the records for which type of fraud? a- Larceny of accounts receivable b- Larceny of sales c- Larceny of cash deposits d- Skimming of sales
d- Skimming of sales
Which of the following billing fraud schemes does not require an accomplice vendor? a- Bid Rigging b- Illegal Gratuities c- Kickbacks d- Unapproved conflict of interest
d- Unapproved conflict of interest
What is the primary purpose of the cutoff bank statement? a- Used in the proof of cash to reconcile cash receipts and cash disbursements b- Confirms ending cash balance c- Used to detect unrecorded receipts and disbursements d- Used to audit deposits in transit and outstanding checks
d- Used to audit deposits in transit and outstanding checks
Which of the following is NOT a completeness test? You Answered a- Search for unrecorded liabilities b- Recalculation of taxes and benefits payable c- Recalculation of interest expense d- Tracing e- Confirmation of accounts receivable
e- Confirmation of accounts receivable
Which is NOT one of the transactions and events assertions? a- Accuracy b- Classification c- Cutoff d- Completeness e- Existence
e- Existence
