A material weakness is a situation in whicha. It is probable that an immaterial financial statement misstatement would not be detectedon a timely basis.b. There is a remote likelihood that a material misstatement would be detected on a timely basis.c. It is reasonably possible that a material misstatement would not be detected on a timelybasis.d. It is reasonably possible that an immaterial misstatement would not be detected on atimely basis.

Which of the following presumptions is correct about the reliability of evidential matter? a. To be reliable, evidential matter should be convincing rather than persuasive. O b. Reliability of evidential matter refers to the amount of corroborative evidence obtained. O c. Effective internal control provides more assurance about the reliability of evidential matter. O d. Information obtained indirectly from outside sources is the most reliable evidential matter.

Which of the following statements about confirming accounts receivable (A/R) and accounts payable (A/P) is true?   Question options:   A/R confirmations are more likely to include the client's balance than A/P confirmations.   A/R and A/P are always confirmed regardless of the materiality of the balance or risks of material misstatement.   The assertion with the highest risk of material misstatement for A/R and A/P is Existence.   Positive and negative confirmations are always used to audit A/R and A/P.

Which of the following circumstances might indicate that management is manipulating the allowance for doubtful accounts?

Misstatements in the financial statements can result from errors or fraud and may consist of any of the following: An inaccuracy in gathering or processing data from which financial statements are prepared. A difference between the amount, classification, or presentation of a reported financial statement element, account, or item and the way that it should have been reflected under GAAP. The omission of a financial statement element, account, or item. A financial statement disclosure that is not presented in conformity with GAAP. The omission of information required to be disclosed in conformity with GAAP. An incorrect accounting estimate due to oversight, misrepresentation of facts, or fraud. Management’s judgments concerning an accounting estimate or the selection or application of accounting policies that the auditor may consider unreasonable or inappropriate.          What steps would you take if you discover 1 of the above issues in a routine audit? Would you take…

When financial statements contain a departure from GAAP because, due to unusual circumstances, the statements would otherwise be misleading, the auditor should explain the unusual circumstances in a separate paragraph and express an opinion that is....... Select one: a. Adverse. b. Qualified. c. Qualified or adverse, depending on materiality. " d. Unqualified.

What is the ethical value of applying the Fraud Triangle to assess the risk of material misstatements in the financial statements?

What role does the rationalization phase play in the process of financial statement fraud? A) Concealing fraudulent activities B) Initiating the fraudulent process C) Justifying unethical actions D) Exploiting weaknesses in controls

The auditor is typically concerned with two major types of mistakes that materially impact the financial statements when testing controls and when performing substantive testing. Identify the pair of the major mistakes as:   A) Risk of Assessing Control Risk Too Low/Risk of Incorrect Rejection B) Risk of Assessing Control risk Too High/Risk of Incorrect Rejection C) Risk of Assessing Control Risk Too Low/Risk of Incorrect Acceptance

Applying substantive tests to the details of asset and liability accounts as of an interim date, rather than as the balance sheet date: Eliminates the use of certain statistical sampling methods that would otherwise be available, Presumes that the auditor will reperform the tests as of the balance sheet date, Should be especially considered when there are rapidly changing economic conditions, Potentially increases the risk that errors which exist at the balance sheet date will not be detected