1. Fred, employee of ABC Company, notices the company has poorinternal controls and lack of segregation of duties. He realizes hecould take some cash and record it against miscellaneous expensewithout anyone catching it if he wanted. Which part of the fraudtriangle does Fred's thought relate to?
A. Opportunity
B. Rationalization
C. Pressure
D. None of the Above
2. Auditors must provide _______ assurance that the financialstatements are presented ________ in all material respects.
A. Reasonable; Fairly
B. Fairly; Reasonable
C. Complete; Justly
D. Justly; Complete
3. ____are items that management has full control over and isable to delay or eliminate.
A. Nondiscretionary accruals
B. Discretionary accruals
C. Defining Materiality
D. Revenue Recognition
4. ___Requires the auditor to perform professional services withdue care.
A. Legal Liability
B. Stat utory Law Liability
C. Common-Law Liability
D. Liability to Clients
5. Which is one of the UKs six principles on what constitutesadequate procedures?
A. Risk Assessment
B. Due diligence
C. Monitoring and Reporting
D. All of the Above
E. None of the above
6. The Fraud Triangle consists of:
Rationalization
Incentives & Pressures
Opportunities
D. All of the Above
7. A standard auditorâs report must include which of thefollowing:
What was audited
Management & auditorâs responsibilities
Scope of the audit
The auditorâs opinion
All of the Above
8. What does privity relationship mean?
A partyâs financial liability is limited
A party can sue if fraud has taken place
A party has a contractual obligation
A party may be a user of the financial statements
9. When an auditor acts careless in the application ofprofessional standards that it implies a reckless disregard for thestandards of due care is referred to as?
A. Negligence
B. Due Care
C. Fraud
D. Constructive Fraud
10. What is the legal term for the intent to deceive, manipulateor defraud?
A. Constructive Fraud
B. Due Care
C. Misfeasance
D. Scienter
11. From an accounting perspective, _____ implies a tendency todefer the recognition of assets and items that increase net incomewhile reserving for possible future declines in earnings:
A. High secrecy
B. High professionalism
C. High conservatism
D. High flexibility
12. According to CIMA code of ethics, âWhen you become sosympathetic to the interests of others as a result of a closerelationship that your professional judgment becomes compromisedâ,is considered:
A. Self-interest threat
B. Intimidation threat
C. Advocacy threat
D. Familiarity threat
13. To be appropriate audit evidence must be both:
A. Relevant and reliable
B. Significant and documented
C. Material and quantitative
D. Objective and reasonable
14. Common law liability does not include:
A. Breach of contract
B. Legislation passed a state or federal level
C. Tort actions
D. Legal opinions issued by judges
15. All of the following EXCEPT_______ is part of "The FraudTriangle"
A. Incentives/Pressures
B. Opportunity
C. Rationalization
D. All of the Above
16. A law suit against an accountant for failing to live up tothe terms of a contract is what type of legal liability?
Common-Law liability
Foreseeable Legal liability
Liability to Third Party
Liability to Clients
17. Audit Risk consist of 3 components:
Inherent, detection, material misstatement
Professional judgment, material misstatement, materialityjudgments
Inherent, detection, control
All the above
18. CIMAâs code identifies five common threats:
A. Integrity, Self-review, Objectivity, Intimidation,professional behavior
B. Integrity, self-review, self- interest, Intimidation,professional behavior
C. Self-review, self-interest, Intimidation, Familiarity,Advocacy
D. Integrity, Intimidation, Familiarity, self-interest,Advocacy
