A3 - Fraud Risk

Question 1

What are the two presumptions of risk in every audit?

Answer 1

Improper revenue recognition and management override of controls

Question 2

When are analytical procedures required to be performed?

Answer 2

During the planning and final review stages

Question 3

T/F: Discussion among engagement personnel regarding the risk of material misstatement due to fraud is recommended but not required

Answer 3

False; it is required and required to be documented

Question 4

T/F: The disclosure of fraudulent activities to parties other than the client’s senior management and those charged with governance is not ordinarily part of the auditor’s responsibility

Answer 4

True; under certain circumstances it is permissible

Question 5

Which fraud is most difficult to detect?

Answer 5

Collusion

Question 6

What is the primary objective of the fraud brainstorming session?

Answer 6

Assess the potential for material misstatement due to fraud