M1-Fraud Risk Flashcards
Although documentation that is lost may be a result of error (e.g., the client misplaced the document), the auditor should approach lost documentation with a heightened risk that fraud may have occurred (e.g., the client intentionally destroyed the documentation). (true or false)
true
Audit documentation is required to include a description of the discussion among engagement personnel regarding the risk of material misstatement due to fraud. (true or false)
true
During planning, the audit team is required to discuss the potential for material misstatement due to fraud, and the fraud risk factors should be included in that discussion. (true or false)
true
The auditor should inquire whether management (not operating personnel) has communicated to those charged with governance (not management) regarding internal control and how it functions to prevent, deter, or detect material misstatement due to fraud. (true or false)
true
During every stage of the audit, the auditor should consider the assessment of the risk of material misstatement. During the overall review stage, the auditor should consider whether the results of any of the audit procedures affect the assessment of the risk of material misstatement due to fraud. (true or false)
true
The auditor should consider the implications of an act of noncompliance with laws and regulations in relation to other aspects of the audit, particularly the reliability of representations of management. (true or false)
true
It is often difficult to detect fraudulent intent in matters involving accounting estimates and the application of accounting principles because there is a high degree of management judgment and subjectivity. (true or false)
true
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. (true or false)
true
A lack of independent checks is a fraud risk factor that provides an opportunity for misapropriation of assets. (true or false)
true
During an audit, the auditor should maintain an attitude of professional skepticism, which includes a questioning mind and a critical assessment of audit evidence. (true or false)
true
Bearer bonds represent the highest risk of misappropriation of assets by an entity because they are unregistered with no records of the owner(s) or transactions involving ownership. Historically, bearer bonds have been used to facilitate money laundering, tax evasion, and to conceal business transactions. (true or false)
true
The definition of fraud is an intentional act that results in a material misstatement in financial statements that are the subject of an audit. (true or false)
true
