Question 1

In order to serve as a control activity useful in reducing the risk of fraud, the computer should match the credit memo information with the _________ (choose three).

Accepted Answer

The answer of In order to serve as a control...

Question 2

In the initial procedures of the audit program for the revenue cycle, which of the following substantive tests come under the category of tests of details of transactions?

Accepted Answer

The answer of In the initial procedures of the audit...

Question 3

Which of the following control activities are useful in reducing the risk of fraud?

Accepted Answer

All three control activities listed help reduce the risk of fraudulent sales returns. Authorizing returns ensures they are legitimate, requiring proper authorization for receiving goods ensures that returns are handled in a controlled manner, and an independent count of goods returned helps prevent fraudulent claims. Combining the duties of authorizing sales returns and receiving goods would be a segregation of duties issue and increase the risk of fraud, so D is not a useful control activity for reducing the risk of fraud.

Question 4

When shopping at Lucky Donuts for coffee and a bagel before heading into work, the cashier asked Susan Donahue if she wanted her receipt.Susan had paid cash, so she didn't really need her receipt.However, she noticed a sign on the register that said "please ask for a receipt".Why is it in the interest of the owner of Lucky Donuts to have the customer ask for a receipt?

Accepted Answer

The answer of When shopping at Lucky Donuts for coffee...

Question 5

What controls will address the risk of mail receipts being lost or misappropriated after receipt?

Accepted Answer

The answer of What controls will address the risk of...

Question 6

Which of the following help the fraudster sometimes solve the problem of having to continue the process of lapping?

Accepted Answer

The answer of Which of the following help the fraudster...

Question 7

When performing cutoff tests for sales, a misstatement of one of which two assertions will be caused if January sales are recorded in December for a calendar-year client?

Accepted Answer

The answer of When performing cutoff tests for sales, a...

Question 8

Explain what a lapping scheme is, provide an example of a lapping scheme, and explain what the auditor should be alert for to detect a lapping scheme.

Accepted Answer

The answer of Explain what a lapping scheme is, provide...

Question 9

Which two of the following individuals often lead a disclosure committee?

Accepted Answer

The chief finance officer and the chief legal officer often lead a disclosure committee because they have expertise in financial reporting and legal compliance, respectively. The verification officer and the chief operating officer may also be members of the committee, but they typically do not lead it.

Question 10

What procedures should an auditor perform for a positive confirmation that is not returned by the client's customer?

Accepted Answer

The answer of What procedures should an auditor perform for...

Question 11

Which of the following may be found in a journal entry in the general ledger?

Accepted Answer

The answer of Which of the following may be found...

Question 12

In vouching revenue transactions, the auditor selects a sample of sales invoices to vouch to the supporting source documents in order to provide evidence pertaining to four assertions.Which ones are these (choose two options)?

Accepted Answer

The answer of In vouching revenue transactions, the auditor selects...

Question 13

PCAOB AS 2310, The Confirmation Process and AU-C 505 state there is a presumption that the auditor will request the confirmation of receivables during an audit unless there are special conditions.Which of the following are among these conditions?

Accepted Answer

According to PCAOB AS 2310 and AU-C 505, there is a presumption that the auditor will request confirmation of receivables unless there are special conditions. These special conditions include situations where accounts receivable are immaterial to the financial statements and where the use of confirmations would be ineffective as an audit procedure. If the assessed level of risk of material misstatement is high or if there are no other planned substantive procedures that address the assessed risk, these are not considered special conditions that would exempt the auditor from requesting confirmations.

Question 14

In order to test programmed application controls in the revenue cycle and determine whether expected results appear on exception reports, an auditor might submit a/an _________ (choose two options).

Accepted Answer

Submitting a missing customer code and an order that exceeds a customer's credit limit would test whether the programmed application controls are able to identify and flag exceptions, as these are common issues that need to be flagged for further review. Including a valid product code and an invoice quantity matching quantity on shipping documents would not necessarily test the effectiveness of programmed application controls in identifying exceptions.

Question 15

To address the assertion of accuracy for cash receipts, which of the following are exception reports generated daily?

Accepted Answer

The answer of To address the assertion of accuracy for...

Question 16

Which of the following are part of a sales adjustment transaction?

Accepted Answer

The answer of Which of the following are part of...

Question 17

In which of the following cases are revenue transaction vouching tests performed more extensively?

Accepted Answer

The answer of In which of the following cases are...

Question 18

By sending monthly statements to customers, most companies control three assertions related to receivables at historical cost.Which ones are those?

Accepted Answer

The answer of By sending monthly statements to customers, most...

Question 19

In the initial procedures of the audit program for substantive tests of revenue cycle assertions, to determine that the trial balance is an accurate and complete representation of the underlying accounting records, the auditor should compare a sample of the customer balances shown in the ________ with that in the _________ .

Accepted Answer