4/18/2024


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Total Questions 48
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Course # 111002
Internal Control And Fraud Detection
based on the electronic .pdf file(s):

Internal Control And Fraud Detection
by: Delta CPE, 2014, 201 pages


9 CPE Credit Hours
Auditing

A P E X C P E . C O M  . . . . .  1.877.317.9047  . . . . .  support@apexcpe.com


Chapter 0 - Course Material

1.    Which of the following best describes the primary purpose of audit procedures?   
To detect errors or fraud
To comply with United States generally accepted accounting principles (GAAP)
To gather corroborative evidence
To verify the accuracy of account balances
2.    An internal audit serves to review accounting, financial, and other operations by   
A legal investigation
An independent appraisal activity
A regulatory agent
The Internal Revenue Service
3.    The internal auditor assures that company assets are used economically and efficiently and are   
The latest in technology
Quality designed
Used in compliance with IRS
Accounted for and safeguarded from losses of all kinds.
4.    The Certified Internal Auditor (CIA) exam covers the following subject area(s) except:   
Internal audit process
Business law
Internal audit skills
Management control and information technology
5.    An example of an audit tool can be   
An inventory
An alarm system
A questionnaire
Antivirus software
6.    The cost of shipping cartons should have something to do with the number of units sold. This is an example of   
Proportional analysis
Pre-audit
Regression
Verification
7.    The information gathered by the internal auditor from departments or operation sections is termed the   
Post-audit
Verification
Pre-audit
Evaluation
8.    The internal audit report must be factual, based on hard evidence and include   
A resume of all personnel
A summary of major findings and recommendations
A list of products and services for future development
A guarantee that no internal fraud exists
9.    Management audits involve and effect   
Only first level management
Only middle management
All levels of management
Only senior management
10.    A factor to consider in assessing control environment includes   
The software components
The hardware
The safety systems
The integrity and ethical values
11.    _____________________________ may be relevant to the risk of preparing financial statements that are not in conformity with United States generally accepted accounting principles   
Budgets
Expanded foreign operations
Forecasts
Recording transactions
12.    Internal control should be monitored in order to identify deficiencies which could adversely affect the operations of an entity and   
The policies of the company
The public and social climate
The external economic conditions
The financial statement presentation
13.    The internal control as a whole should provide   
A system of checks and balances
List of all personnel
Descriptions of the hardware and software
An unconditional guarantee that no fraud or collusion or misappropriation exists
14.    The Foreign Corrupt Practices Act contains prohibitions against   
Mismanagement
Hostile takeovers
Hedging of currency risk
Ineffective internal control
15.    Under Section 404 of the Sarbanes-Oxley Act, the role of internal control over financial reporting is   
To provide assurances of the quality of a firms business model
To support the integrity and reliability of a firms external financial reporting process
To provide assurances about the firms performance
To provide assurances of a firms future results
16.    The reporting requirements for management and the independent auditor to report on the effectiveness of internal control over financial reporting is called   
US GAAP reporting requirement
The new model reporting requirement of the Sarbanes-Oxley Act
Prospective financial statement reporting
Internal Revenue's most recent ruling
17.    Management’s report must indicate that internal control over financial reporting is either   
Subjective or objective
Regulated or unregulated
General or exclusive
Effective or ineffective


Chapter 1 - Internal Control and the Internal Audit Function



Chapter 2 - Internal Audit of Financial Statement Accounts

18.    The process whereby the auditor can obtain corroborating evidential matter from an independent party outside the organization is   
Confirmation
Inquiry
Observation
Inspection
19.    An internal audit work program should first   
Establish the audit objectives
Select the necessary audit hardware
Choose the necessary audit software
Perform the cut-off tests
20.    SAS 99 makes clear that error differs from fraud. Fraud refers to acts that are   
Verifiable
Incorrect
Intentional
Unauthorized
21.    An auditor is responsible for planning and performing a financial statement audit in order to   
Obtain absolute assurance that financial statements are free of material misstatements
Obtain reasonable assurance whether the financial statements are free of material misstatements
Conduct a criminal investigation for any wrong doing
Advise management on future products and services
22.    Audit teams that discuss the potential for material misstatement due to fraud are considered to be   
Exercising due care
Due diligence
In collusion
Brainstorming
23.    Judgments about risk of material misstatements caused by fraud may have an overall effect on the audit in   
The development of company policy
The social responsibility of the company
The assignment of personnel
The morality of the work force
24.    The auditor is generally precluded from communicating with non-client personnel about fraud. However, the auditor is permitted to disclose such information   
When management is involved in fraud
When permitted by law
When employees are involved in misstatement
When collusion is involved with outside parties
25.    Unduly aggressive or overly optimistic press releases on the level of profitability or expectations of investment analysts or key institutional investors can   
Create a negative work environment
Create an increase in non-related risk factors
Create excessive pressure on management that may result in misstatement or fraud
Increase earnings and market price per share.
26.    The ineffective monitoring of management can be a result of   
Establishing an audit committee oversight over the financial reporting process and internal control
A single person or small group that dominates management
The addition of outside independent board members
Excessive safeguards and monitoring systems
27.    Which of the following documentation is not required of the auditor by SAS 99?   
The details of the required brainstorming
The executive summary
The procedures performed to identify and assess the risks of material misstatement caused by fraud
Specific risks of material misstatement caused by fraud that the auditor identified as well as a description of the auditor's response thereto
28.    Error does not include   
Misinterpretation
Mistakes
Intentional acts
Use of incorrect accounting estimates
29.    In attempting to secure job interviews potential employees often   
Fail to list all their education and related work experience
Give too many glowing letters of recommendation
Lie or exaggerate on their resumes
Lack the necessary skill to apply for the positions they are seeking
30.    Senior staff members in positions of trust   
Have greater responsibility for outside risks
Have more social commitment
Lack motivation for fraud or misstatement
Have more opportunity to commit fraud
31.    Which of the following statements is not true regarding whistleblowers?   
Having a whistleblower policy might discourage potential whistleblowers from approaching the press as a first resort.
Whistleblowers are being hailed as corporate heroes and saving the business from potential financial ruin,
Employers should be encouraging whistleblowers to come forward as the quicker a business can spot fraud, the better.
Many whistleblowers are sidelined or their careers blighted by their honest actions.


Chapter 3 - Statistical Sampling in Tests of Controls

32.    A sampling method that is based on a binomial distribution is   
Discovery sampling
Attribute sampling
Random sampling
Stratified sampling
33.    Discovery sampling is used in a search for critical deviation such as   
Fraud and irregularities
Customer's accounts that are either past due or not
A numerical sequencing of all items of a population
Estimating the total value of inventory in a chain store


Chapter 4 - Fraud Prevention, Fraud Detection, and Forensic Accounting

34.    The purpose of the fraud prevention checkup is to identify major gaps in your fraud prevention system. Which of the following is a true statement?   
Low point scores in particular areas mean minor gaps in your system
A score of 80 points out of 100 will be acceptable
There is no passing grade other than 100 points
Internal audits are designed to detect fraud
35.    Fraud accountants apply their skills to investigate areas of an alleged criminal misconduct in order to   
Give an expert testimony
Support or dispel damages
Verify if financial statements have been prepared according to USA GAAP
Ensure that the prescribed operating procedures have been followed
36.    Studies show that fraud currently most often results from   
Suppliers
Customers
Agents
Employees
37.    Forensic accountants are not usually used for   
Business evaluations or corporate disputes
Personal injury and fatal accident claims
Internal audits or external audits
Professional negligence and arbitration
38.    In cases of litigation support consulting, the forensic accountant is asked to provide   
An estimate of his time and cost
Arbitration services
An opinion based on facts
Asset search and analysis
39.    Data mining tools have the potential to significantly enhance   
The inadequacy of an accounting system
Sampling risk
The detection of fraudulent activity or reduce the threat of fraud
The reputation and working environment of a company
40.    Fraud is usually detected by recognizing and pursuing   
Equity.
Symptoms.
Legends.
Synonyms.
41.    Which of the following is NOT a category of employee fraud symptoms?   
Tips and complaints.
Analytical anomalies.
Accounting anomalies.
Firm structure and culture.
42.    In some respects the advances of technology have enabled criminals to commit crimes   
Less often and less successfully
More quickly and successfully
With fewer clues and paper trails
Without leaving any paper trail
43.    __________________________________ videotapes every mouse click of the investigative process to make court testimony more credible.   
Case management software
Chain-of-custody documentation hardware
Portable disk duplicator and/or duplication software
Network sniffer (hardware)
44.    Auditing differs from fraud examination. A main feature of auditing is that   
It is specific
It fixes blame
It expresses an opinion
It is nonrecurring
45.    The number one form of business frauds is:   
False financial statements.
Credit card fraud.
Medical insurance claims fraud.
Check fraud.
46.    Which one is probably the most effective fraud prevention method?   
Reducing rationalization
Increasing the perception of detection
Having an open-door policy
Screening employees
47.    Which one of the following should be examined in order to check if the equality of the debits and credits has been maintained?   
The income statement
The statement of financial position
The trial balance
The statement of retained earnings
48.    Lee, the authorized signer on his company's accounts, prepared and signed a check payable to the company's vendor. He gave the check to Kim, his secretary, and asked her to mail the check to the plumber. Instead, Kim took the check home, signed the vendor's name on the back and had her husband cash the check at their convenient store. Which of the following schemes did Kim commit?   
A forged endorsement scheme
An altered payee scheme
A forged maker scheme
An authorized maker scheme

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