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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Question
Chapter 4, Problem 9CYBK
To determine
Concept introduction:
Breach of contract:
Breach of contract is a legal term used in the contract law. Breach of contract refers to the situation when any party of the contract fails to fulfill his part of the obligation as decided in the contract.
To identify: Whether the given statement is true or false.
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When an employee is in a position to detect and hide fraudulent activity, incompatible obligations exist.
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When an employee is in a position to penetrate and hide fraud, incompatible roles exist.
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Define and explain the differences among several kinds of employee frauds that might occur at an audit client.
Chapter 4 Solutions
Auditing: A Risk Based-Approach (MindTap Course List)
Ch. 4 - Prob. 1CYBKCh. 4 - Prob. 2CYBKCh. 4 - Prob. 3CYBKCh. 4 - Prob. 4CYBKCh. 4 - Prob. 5CYBKCh. 4 - Prob. 6CYBKCh. 4 - Prob. 7CYBKCh. 4 - Prob. 8CYBKCh. 4 - Prob. 9CYBKCh. 4 - Prob. 10CYBK
Ch. 4 - Prob. 11CYBKCh. 4 - Prob. 12CYBKCh. 4 - Prob. 1RQSCCh. 4 - Prob. 2RQSCCh. 4 - Prob. 3RQSCCh. 4 - Prob. 4RQSCCh. 4 - Prob. 5RQSCCh. 4 - Prob. 6RQSCCh. 4 - Refer to the Focus on Fraud feature “Moss Adams...Ch. 4 - Prob. 8RQSCCh. 4 - Prob. 9RQSCCh. 4 - Prob. 10RQSCCh. 4 - Prob. 11RQSCCh. 4 - Prob. 12RQSCCh. 4 - Prob. 13RQSCCh. 4 - Prob. 14RQSCCh. 4 - Prob. 15RQSCCh. 4 - Prob. 16RQSCCh. 4 - Prob. 17RQSCCh. 4 - Prob. 18RQSCCh. 4 - Prob. 19RQSCCh. 4 - Prob. 20RQSCCh. 4 - Prob. 21RQSCCh. 4 - Able Corporation decided to make a public offering...Ch. 4 - KPMG (LO 1, 2, 3) KPMG LLP served as the external...Ch. 4 - ToshIba, EY (LO 1, 2, 3) In 2015, the business...
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- Why do auditors need to differentiate between employee and management fraud? Is it the responsibility of auditors to discover fraud?arrow_forwardIn a fraud examination, original documents must be protected from damage and tampering toa. Establish motive.b. Develop documentation for employee dismissal.c. Protect the chain of custody.d. Ensure that suspects are unaware of an investigation in progressarrow_forwardWhich type of agent is not liable for a breach of contract by his principal: a. undisclosed agent b. partially disclosed agent c. fully disclosed agent d. all of the abovearrow_forward
- Culpa aquiliana as distinguished from culpa contractual: Proof of due diligence in the selection and supervision of employees is not considered a defense. Proof of the contract and its breach is sufficient to warrant recovery. The negligence of the defendant is only an incident in the performance of the obligation. The source of liability is the negligent act of the person causing damage to another.arrow_forwardThe auditor’s primary consideration is whether, and how, internal control prevents, or detects and corrects: illegal actions of the Management None of these options Material misstatement of the entity’s financial statements Incentives that prompt an employee to behave improperlyarrow_forwardWhich of the following is NOT a possible legal risk that can arise because of a fraud investigation conducted in an improper manner? A. Forcible entry and detainer. B. Invasion of privacy. C. Defamation. D. Malicious prosecution.arrow_forward
- If either party fails to perform their contractual obligations according to the contract terms, it will usually result in a breach of contract. The scope and nature of an auditor's contractual obligation to a client ordinarily is established in the: Select one: a. Corporations Act 2001. b. Management letter. c. Client’s constitution. d. Engagement letter.arrow_forwardWhich of the following statements reflects an auditor’s responsibility for detectingfraud?(1) An auditor is responsible for detecting employee errors and simple fraud, butnot for discovering fraudulent acts involving employee collusion or managementoverride.(2) An auditor should plan the audit to detect fraud caused by departures from GAAP.(3) An auditor is not responsible for detecting fraud unless the application of auditingstandards would result in such detection.(4) An auditor should design the audit to provide reasonable assurance of detectingerrors and fraud that are material to the financial statements.arrow_forwardWhat are the defining characteristics of (a) white-collar crime, (b) employee fraud, (c) embezzlement,(d) larceny, (e) defalcation, (f) management fraud, and (g) errors?arrow_forward
- Individuals who believe they relied on misstated financial statements to make a decision andhave suffered losses as a result will issue an action known as aa. Breach of contract.b. Tort.c. Securities litigation.d. Constructive fraud.arrow_forward1) Using the categories included in the professional standards, embezzlement is an example of: a)other illegal acts. b)misappropriation of assets. c)fraudulent financial reporting. d)an error. 2) Using the categories included in the professional standards, inappropriately and intentionally failing to expense expired amounts of the prepaid insurance is an example of a)misappropriation of assets. b)other illegal acts. c)fraudulent financial reporting. d)direct effect illegal act 3)A financial statement audit should be designed to obtain reasonable assurance that the financial statements are free of material misstatement due to: a)misappropriation of assets only. b)fraudulent financial reporting only.c)neither fraudulent financial reporting nor misappropriation of assets. d)both fraudulent financial reporting and misappropriation of assets 4)A financial statement audit should be designed to obtain reasonable assurance that the financial statements are free of material…arrow_forwardA moral or legal obligation to ensure the safety or well-being of others Could be defined as duty of care. An auditor's duty of care to a client would most likely be breached if the auditor failed to: Select one: a.comply with the Cooperation Act 2001 & all relevant auditing standards. b. Resolve their staffing issues. c. conduct the audit for the cheapest price. d.Prevent & detect earnings of management.arrow_forward
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