Auditing And Assurance Services
17th Edition
ISBN: 9780134897431
Author: ARENS, Alvin A.
Publisher: PEARSON
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Question
Chapter 23, Problem 16.2MCQ
To determine
Identify the act that will be prevented when the auditor controls and verifies all liquid assets simultaneously.
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1. Identify potential fraud schemes related to long-lived assets.
2. Consider the risks typically associated with tangible long-lived assets and identif the internal controls over these assets that you would expect a client to have in place
Besides the fraud triangle, auditors are required to consider two conditions which might lead to fraud. They are:
a. Inflated sales and bill-and-hold transactions.
b.Bill-and-hold transactions and embezzlement of cash.
c. Improper revenue recognition and stealing of inventory.
d. Management override of controls and improper revenue recognition.
Explain why auditors usually emphasize the detection of fraud inthe audit of cash receipts. Is this consistent or inconsistent with the auditor’s responsibilityin the audit? Explain.
Chapter 23 Solutions
Auditing And Assurance Services
Ch. 23 - Explain the relationships among the initial...Ch. 23 - Prob. 2RQCh. 23 - Prob. 3RQCh. 23 - Prob. 4RQCh. 23 - Prob. 5RQCh. 23 - Prob. 6RQCh. 23 - Prob. 7RQCh. 23 - Prob. 8RQCh. 23 - Prob. 9RQCh. 23 - Prob. 10RQ
Ch. 23 - Prob. 11RQCh. 23 - Prob. 12RQCh. 23 - Prob. 13RQCh. 23 - Prob. 14RQCh. 23 - Prob. 15.1MCQCh. 23 - Prob. 15.2MCQCh. 23 - Prob. 15.3MCQCh. 23 - Prob. 16.1MCQCh. 23 - Prob. 16.2MCQCh. 23 - Prob. 16.3MCQCh. 23 - Prob. 17.1MCQCh. 23 - Prob. 17.2MCQCh. 23 - Prob. 17.3MCQCh. 23 - Prob. 18DQPCh. 23 - Prob. 19DQPCh. 23 - Prob. 20DQPCh. 23 - Prob. 21DQPCh. 23 - Prob. 22DQPCh. 23 - You are doing the first-year audit of Sherman...Ch. 23 - Prob. 24DQPCh. 23 - Prob. 25DQPCh. 23 - The amount of subjectivity involved in...
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Distinguish between fraudulent financial reporting and misappropriation of assets. Discuss the likely difference between these two types of fraud on thefair presentation of financial statementsarrow_forwardIn which of the following circumstances would an auditor expect to find that an entity had implemented automated controls to reduce risks of misstatement?a. When errors are difficult to predict.b. When misstatements are difficult to define.c. When large, unusual, or nonrecurring transactions require judgment.d. When transactions are high volume and recurring.arrow_forwardIn a financial statement audit, inherent risk represents a. The risk that misstatements could occur and not be detected by the auditor's procedures. b. The risk that misstatements could occur and not be prevented or detected by the system of internal control. c. The risk that the auditor fails to modify materially misstated financial statements. d. The susceptibility of an account balance to misstatement that could be material.arrow_forward
- Define dishonest financial reporting and theft of assets, and provide an example of each kind.arrow_forwardExplain the responsibilities of external auditors in detecting fraud in the financial statements.arrow_forwardWhen performing a financial statement audit, auditors are required to explicitly assess the risk of material misstatement due to:Select one: a. Illegal acts. b. Fraud. c. Business risk. d. Errors.arrow_forward
- {Auditing} 47. From the following statements, identify which error/s creates material misstatement while reporting the financial position of the entity. a. Creating secret reserves b. Under reporting of assets c. All the options d. Over reporting of liabilitiesarrow_forwardIt refers to the risks that a material misstatement will even occur, that it would not be prevented ordetected by client internal controls, and that is not detected by the auditor’s own procedures.a. Inherent riskb. Control riskc. Detection riskd. Audit risk Audit risk and materiality are considered at the level ofa. Overall financial statements.b. Assertions relating to individual account balance, class of transactions, or disclosure.c. Both a and b.d. Neither a nor b.arrow_forwardThe most important objective of risk assessment procedures performed by auditor is a. To identify and assess financial risk in the activities of the entity b. To identify and assess the risk in achieving the entity objectives c. To detect material misstatements in the financial statements d. To detect errors and fraud occurred in the books of accountsarrow_forward
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