Auditing: A Risk Based-Approach (MindTap Course List)
11th Edition
ISBN: 9781337619455
Author: Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher: Cengage Learning
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Chapter 2, Problem 12CYBK
To determine
Introduction:Committee of Sponsoring Organizations of the Tread way Commission (COSO) is an authorized provider for guiding companies on various matters like internal controls of management, threat management, and fraud anticipation.
To identify:The results drawn from the COSO studies.
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Explain the three special characteristics of management fraud:
a. The fraud is perpetrated at levels of management above the one to which internal control structures generally relate.
b. The fraud frequently involves using the financial statements to create an illusion that an entity is healthier and more prosperous than, in fact, it is.
c. If the fraud involves misappropriation of assets, it frequently is shrouded in a maze of complex business transactions, often involving related third parties.
Please provide me a correct and clear explanations. Thank you!
Question: Which of the following statements accurately describes a fraud detection
technique in accounting? a) Fraud detection relies solely on analyzing financial
statements. b) Regular internal audits are unnecessary for fraud detection. c)
Segregation of duties is an effective fraud detection measure. d) Fraud detection
techniques do not require the use of technology.
Which of the following is NOT a trend in Corporate Fraud?
a) Anti-fraud controls have little impact on reduced fraud losses and shorter fraud duration
b) Tips are consistently the most common detection method
c) Banking, financial services, government/public administration and manufacturing have the greatest number of fraud cases reported
Chapter 2 Solutions
Auditing: A Risk Based-Approach (MindTap Course List)
Ch. 2 - The Great Salad Oil Swindle of 1963 is an asset...Ch. 2 - Prob. 2CYBKCh. 2 - Prob. 3CYBKCh. 2 - Prob. 4CYBKCh. 2 - The three elements of the fraud triangle include...Ch. 2 - Prob. 6CYBKCh. 2 - Prob. 7CYBKCh. 2 - Prob. 8CYBKCh. 2 - Prob. 9CYBKCh. 2 - Prob. 10CYBK
Ch. 2 - Prob. 11CYBKCh. 2 - Prob. 12CYBKCh. 2 - Prob. 13CYBKCh. 2 - Prob. 14CYBKCh. 2 - Prob. 15CYBKCh. 2 - Prob. 16CYBKCh. 2 - Prob. 17CYBKCh. 2 - Prob. 18CYBKCh. 2 - Prob. 19CYBKCh. 2 - Prob. 20CYBKCh. 2 - Prob. 21CYBKCh. 2 - Prob. 22CYBKCh. 2 - Prob. 23CYBKCh. 2 - Prob. 24CYBKCh. 2 - Prob. 1RQSCCh. 2 - Prob. 2RQSCCh. 2 - Prob. 3RQSCCh. 2 - Refer to Exhibit 2.1 a. What is a Ponzi scheme? b....Ch. 2 - Prob. 5RQSCCh. 2 - Prob. 6RQSCCh. 2 - Prob. 7RQSCCh. 2 - Prob. 8RQSCCh. 2 - Prob. 9RQSCCh. 2 - Prob. 10RQSCCh. 2 - Prob. 11RQSCCh. 2 - Prob. 12RQSCCh. 2 - Prob. 13RQSCCh. 2 - Prob. 14RQSCCh. 2 - Many consider the Enron fraud to be one of the...Ch. 2 - Prob. 16RQSCCh. 2 - Prob. 17RQSCCh. 2 - Prob. 18RQSCCh. 2 - Prob. 19RQSCCh. 2 - Prob. 20RQSCCh. 2 - Prob. 21RQSCCh. 2 - Prob. 22RQSCCh. 2 - Prob. 23RQSCCh. 2 - Prob. 24RQSCCh. 2 - Prob. 25RQSCCh. 2 - Prob. 26FFCh. 2 - Prob. 27FFCh. 2 - Prob. 28FF
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- The following scenarios are taken from actual fraud cases. For each scenario, categorize as primarily indicating (A) An incentive to commit fraud (B) An opportunity to commit fraud or (C) a rationalization for committing fraud. State your reason for your answer in each scenario. 1. Top management of the company closely guards internal financial information, to the extent that even some employees on a "need to know basis" are denied full access.arrow_forwardWhich is NOT a source of fraud risk (from the Fraud Triangle)? a) Fraud Tip Hotline b) Perceived Opportunity c) Rationalization d) Financial Pressurearrow_forwardExplain, what types of fraud scheme is Steinhoff likely to use to commit financial statement fraud?arrow_forward
- Which of the following is not included in a vulnerability chart? a. Internal controls that a company plans to institute in the future. b. Breakdowns in key internal controls that may have created fraud opportunities. c. Theft investigation methods d. Explanations of the fraud triangle in relation to suspects of fraud.arrow_forwardThe Peregrine financial group fraud Background on the company and type of fraud committed How the detection of the fraud was revealed Two methods of investigation that differs from the actual fraud casearrow_forwardThe fraud triangle asserts that the following three factors must exist for a person to commit fraud.A. Opportunity B. Pressure C. RationalizationIdentify the fraud risk factor (A, B, or C) in each of the following situations. The business has no cameras or security devices at its warehouse.arrow_forward
- Fraud risk factors are events or conditions that indicateI. An incentive or pressure to perpetrate fraud.II. An opportunity to carry out the fraud.III. An attitude or rationalization that justifies the fraudulent action.Which of the following statements is true?a. I is a fraud risk factor.b. I and II are fraud risk factors.c. II and III are fraud risk factors.d. None of these is a fraud risk factor.e. I, II, and III are fraud risk factors.arrow_forwardWhich of the following factors creates an opportunity for fraud to be committed in an organization? a. Management demands financial success. b. Poor internal control. c. Commitments tied to debt covenants. d. Management is aggressive in its application of accounting rules.arrow_forwardExplain one gap the company has in internal control procedures in which fraud or errors could occur? What can the company do to prevent or detect this fraud or error?arrow_forward
- Which of the following combinations is a good way to conceal employee fraud but an ineffective means of perpetrating management (financial reporting) fraud?a. Overstating sales revenue and overstating customer accounts receivable balances.b. Overstating sales revenue and overstating bad debt expense. c. Understating interest expense and understating accrued interest payable.d. Omitting the disclosure information about related-party sales to the president’s relatives at below-market prices.arrow_forwardWhich of the following internal control policies, when absent, would increase the opportunity for fraud A. Mandatory vacations for employees with access to assets B. The absence of any of the given choices increases the opportunity for the fraud C. Job applicant screening for employees with access to assets D. Appropriate segregation of duties or independent checks 2. Whom should the auditors contact when they suspect a fraud? A. Either the senior management or the audit committee B. Senior management C. Audit committee of the board of directors D. Expected perpetrators of the fraudarrow_forwardAnswer the following questions and give an example for each case: What category does inventory related fraud fall into? What documents does a perpetrator use to commit billing fraud? What are the three categories in payroll fraud? How is skimming scheme fraud carried out? In which areas can the embezzlement scheme be identified? What can cause fraud to be committed in the presentation of financial statements?arrow_forward
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