11 sas no 99 requires that auditors a plan audits based on an analysis of fraud risk 4306150

11 sas no 99 requires that auditors a plan audits based on an analysis of fraud risk 4306150

11) SAS No. 99 requires that auditors

A) plan audits based on an analysis of fraud risk.

B) detect all material fraud.

C) alert the Securities and Exchange Commission of any fraud detected.

D) take all of the above actions.

12) Which of the following is not a management characteristic that increases pressure to commit fraudulent financial reporting?

A) Close relationship with the current audit engagement partner and manager

B) Pay for performance incentives based on short-term performance measures

C) High management and employee turnover

D) Highly optimistic earnings projections

13) Intentional or reckless conduct that results in materially misleading financial statements is called

A) financial fraud.

B) misstatement fraud.

C) fraudulent financial reporting.

D) audit failure fraud.

14) Researchers have compared the psychological and demographic characteristics of white-collar criminals, violent criminals, and the general public. They found that

A) few differences exist between white-collar criminals and the general public.

B) white-collar criminals eventually become violent criminals.

C) most white-collar criminals invest their illegal income rather than spend it.

D) most white-collar criminals are older and not technologically proficient.

15) Which of the following is an opportunity that could contribute to employee fraud?

A) an employee's spouse loses their job

B) an employee suddenly acquires lots of credit cards

C) an employee is upset that he was passed over for a promotion

D) close association with suppliers or customers

16) Which of the following is a financial pressure that could cause an employee to commit fraud?

A) a feeling of not being appreciated

B) failing to receive a deserved promotion

C) believing that their pay is too low relative to others around them

D) having a spouse injured in a car accident and in the hospital for several weeks

17) Opportunity to commit fraud is comprised of three stages. The stage that often takes most time and effort would include

A) stealing inventory from the warehouse.

B) selling stolen inventory to get cash.

C) lapping accounts receivable.

D) creating false journal entries to overstate revenue.

18) In many cases of fraud, the ________ takes more time and effort than the ________.

A) concealment; theft

B) theft; concealment

C) conversion; theft

D) conversion; concealment

19) Which of the following is the best way to hide theft of assets?

A) Creating “cash” through the transfer of money between banks

B) Conversion of stolen assets into cash

C) Stealing cash from customer A and then using customer B's balance to pay customer A's accounts receivable

D) Charging the stolen asset to an expense account

20) In a ________ scheme, customer receipts are stolen and then subsequent payments by other customers are misapplied to cover the theft of the original receipts.

A) kiting

B) laundering

C) bogus expense

D) lapping

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