Auditors Fraud Related Responsibilites Flashcards
According to International Standard on Auditing (ISA) 240, The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements, the auditor’s assessment of the risk of material misstatement due to fraud at the financial statement level should influence which of the following aspect(s) of an audit?
A. Consideration of accounting policies used
B. Choice of auditing procedures
C. Assignment and supervision of personnel
D. All of the above
D. All of the above
According to The Institute of Internal Auditors’ (IIA) International Standards for the Professional Practice of Internal Auditing, internal auditors must apply the care and skill of an expert whose primary responsibility is investigating fraud.
A. True
B. False
False
An external auditor discovers a significant deficiency in an organization’s internal controls that could result in a material misstatement of the organization’s financial statements. Which of the following is FALSE regarding the auditor’s communication about these findings?
A. The communication should be made in writing.
B. The communication should include a description of the deficiencies and an explanation of their potential effects.
C. The communication should note that the purpose of the audit was to express an opinion on the effectiveness of the organization’s internal controls.
D. The communication should be provided to management and those charged with governance.
C. The communication should note that the purpose of the audit was to express an opinion on the effectiveness of the organization’s internal controls.
If an external auditor identifies an immaterial misstatement in the financial statements that they believe is the result of fraud, they should:
A. Reconsider the reliability of evidence previously obtained
B. Assess the need to adjust the nature, timing, and extent of remaining audit procedures
C. Reevaluate the assessment of risks of material misstatement due to fraud
D. All of the above
D. All of the above
The risk of the auditor not detecting a material misstatement resulting from employee fraud is greater than the risk of the auditor not detecting a material misstatement resulting from management fraud.
A. True
B. False
False
If an external auditor discovers evidence of potential fraud, they are prevented from disclosing these findings to anyone in order to protect client confidentiality.
A. True
B. False
False
Which of the following is NOT one of the responsibilities of the internal auditor with regard to fraud?
A. Evaluate the organization’s structures and process for fraud risk governance.
B. Provide insight and advice to senior management and the board on opportunities to improve the organization’s fraud risk management.
C. Report all findings of fraud to the appropriate regulators within ten working days.
D. Contribute to the organizational fraud risk awareness and training at the request of senior management.
C. Report all findings of fraud to the appropriate regulators within ten working days.
According to International Standard on Auditing (ISA) 240, The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements, if an external auditor suspects or identifies fraud involving management, it is the auditor’s responsibility to report these findings to those charged with governance of the organization.
A. True
B. False
True
fraud?
A. Whether management possesses the necessary skills, resources, and inclination to provide effective fraud risk management
B. Any significant residual fraud risks
C. Management’s level of cooperation with the assessment of the organization’s fraud risk governance and management
D. All of the above
D. All of the above
International Standard on Auditing (ISA) 240, The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements, requires auditors to discuss how management could perpetrate and conceal fraudulent financial reporting.
A. True
B. False
True
When determining the relevance of certain fraud risk factors within an entity, the auditor should consider:
A. The ownership of the entity
B. The size of the entity
C. The complexity of the entity
D. All of the above
D. All of the above
The primary purpose of International Standard on Auditing (ISA) 240 is to:
A. Establish auditors as being primarily responsible for the prevention and detection of fraud within an organization
B. Establish standards and provide guidance on the auditor’s responsibility to consider fraud in an audit of financial statements
C. Establish requirements for auditors related to designing and implementing fraud-related internal controls
D. All of the above
B. Establish standards and provide guidance on the auditor’s responsibility to consider fraud in an audit of financial statements
Government auditors have several considerations regarding fraud during a public-sector financial statement audit that their counterparts in the private sector do not. Which of the following is NOT one of these considerations?
A. Narrower overall audit objectives
B. An inability to withdraw from the audit engagement
C. Additional communications about fraud-related matters
D. A need to consider the concept of abuse
A. Narrower overall audit objectives
The internal audit function should wait until issues related to fraud occur before communicating with senior management or the board of directors about the topic.
A. True
B. False
False
The external auditor should perform which of the following procedures to obtain information to use in identifying the risks of material misstatement due to fraud?
A. Make inquiries of management and others within the entity to determine whether they have knowledge of any actual, suspected, or alleged fraud affecting the entity
B. Evaluate any unusual or unexpected relationships that have been identified in performing analytical procedures
C. Evaluate whether the information obtained from the risk assessment procedures indicates that fraud risk factors are present
D. All of the above
D. All of the above