CH 11

Question 1

What are the types of fraud?

Answer 1

1) management fraud
a) fraudulent financial reporting
b) Misappropriation of assets

Question 2

What makes up fraud triangle?

Answer 2

1) incentives
2) Opportunities
3) attitudes

Question 3

How do you assess the risk of fraud?

Answer 3

1) Judgement or excute professional skepticism

Question 4

What are factors of fraud risks?

Answer 4

1) communication among audit team
2) Inquiries of management
3) Risk factors
4) Analytical procedures
5) other information

Question 5

How do you document a fraud assessment?

Answer 5

1) Discussion among engagement team
2) Procedures performed to assess risk
3) Specific risks and audit response
4) Reasons supporting conclusions
5) Results of procedures performed
6) Other conditions and analytical relationships
7) Nature of communications

Question 6

What reduces fraud risks?

Answer 6

1) Culture of honesty and high ethics
2) Management’s responsibility
3) Audit committee oversight

Question 7

How should you respond to risk of fraud?

Answer 7

1) Change audit conduct
2) Design and perform audit procedures
3) address the risk of management override of controls

Question 8

What are specific fraud risk areas?

Answer 8

1) Rev and accounts receivable
2) Inv fraud
3) Purchases and accounts payable
4) other areas of fraud risk

Question 9

What are inquiry techniques?

Answer 9

1) Info
2) Listening
3) Evaluating responses
4) Observing behavioral cues
5) Assessment
6) Interrogative