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how many types of fraud are there?


what are the types of fraud?

fraudulent financial reporting and misappropriation of assets

what are the components of the fraud triangle?

incentives/pressures, opportunities, and attitudes/rationalization

which of the following is not a factor that relates to opportunities to commit fraudulent financial reporting?

management's practice of making overly aggressive forecasts

which of the following is not a factor that relates to opportunities to misappropriate assets?

adverse relationships between management and employees

while performing their audit, the audit team uncovers fraud that is likely to have an immaterial effect on the financial statements taken as a whole. in this case the auditors should?

disclose the fraud to the audit committee

which of the following is the best reason for management to emphasize fraud prevention and deterrence?

collusion and false documentation make fraud detection difficult to detect

a company concerned with the theft of cash after the sale has been recorded. one way in which fraudsters conceal the theft is by a process called lapping. which of the following best describes lapping?

apply the payment from one customer to another customer's account

analytical procedures can be very effective in detecting inventory fraud. which of the following analytical procedures would NOT be useful in detecting fraud?

accounts payable turnover

the audit team has identified and documented fraud risk. their next step should be to?

proceed with performing substantive tests of balances

which type of inquiry is used when the auditor seeks responses from the interviewee about his or her knowledge of an event or circumstance?


when the auditor suspects that fraud may be present, SAS no 99 require the auditor to?

obtain additional evidence to determine whether material fraud has occurred

with whom should the auditor communicate whenever he or she determines that senior management fraud may be present even if the matter might be considered immaterial?

audit committee

what involves deliberate actions taken by management to meet earnings objectives?

earnings management

what is a form of earnings management in which revenues and expenses are shifted between periods to reduce fluctuations in earnings?

income smoothing

what is normally referred to theft involving employees and others internal to the organization and the most common type of fraud?

misappropriation of assets

management or other employees have what to commit fraud?


what do circumstances provide for management or employees to commit fraud?


what exists that allows management or employees to commit a dishonest act?


what is the fraud triangle?

three conditions for fraud

how are fraudulent financial reporting and misappropriation of assets different and similar?

share the same three conditions but the risk factors differ

because of the risk of material missstatements due to fraud, an audit of financial statements in accordance with generally accepted auditing standards should be performed with an attitude of?

professional skepticism

which of the following circumstances is most likely to cause an auditor to consider whether material misstatements due to fraud exist in an entity's financial statements?

transactions selected for testing are not supported by proper documentation

which of the following characteristics is most likely to heighten an auditor's concern about the risk of material misstatements due to fraud in an entity's financial statements?

the entity's industry is experiencing declining customer demand

which of the following circumstances is most likely to cause an auditor to increase the assessment of the risk of material misstatement of the financial statements due to fraud?

unusual disrepancies exist between the entity's records and confirmation replies

when fraud risk factors are identified during an audit the auditor's documentation should include?

the risk factors identified and the auditor's response to the risk factors identified

if an independent audit leading to an opinion on financial statements cause the auditor to believe that a material misstatement due to fraud exists, the auditor should first?

make the investigation necessary to determine whether fraud has actually occurred

as a result of analytical procedures, the auditor determines that the gross proft percentage has increased from 30% in the preceding year to 40% in the current year. the auditor should?

increase the auditor's assessment of the risk of revenue misstatements, including fraud

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