ACC 403 Quiz 5 The employee in charge of authorizing credit to the company’s customers does not fully understand the concept of credit risk. This lack of knowledge would constitute: When assessing whether the financial statements are auditable, the auditor must consider: Which of the following deal with ongoing or periodic assessment of the quality of internal control by management? Audit evidence regarding the separation of duties is normally best obtained by: Management must disclose material weaknesses in internal control in its audit report: Proper segregation of functional responsibilities calls for separation of: When considering internal controls, an important point to consider is that: Which of the following deficiency exists if a necessary control is missing or not properly formulated? Internal controls normally include procedures designed to provide reasonable assurance that: In performing the audit of internal control over financial reporting the auditor emphasizes internal control over class of transactions because: An audit procedure that would most likely be used by an auditor in performing tests of control procedures in which the segregation of functions and that leaves no “audit” trail is: Narratives, flowcharts, and internal control questionnaires are three common methods of: Which of the following is not one of the three primary objectives of effective internal control? The auditors primary purpose in auditing the client’s system of internal control over financial reporting is: Reasonable assurance allows for: Misappropriation of assets is normally perpetrated by: Financial statement manipulation risk is arguably present for all companies’ financial statements. However, the risk is elevated for companies that: Two of the most useful warning signals that can indicate that revenue fraud is occurring are: Analytical procedures can be very effective in detecting inventory fraud. Which of the following analytical procedures would not be useful in detecting fraud? When assessing the risk for fraud, the auditor must be cognizant of the fact that: Which of the following is a factor that relates to incentives or pressures to commit fraudulent financial reporting? Which of the following is least likely to uncover fraud? Who is most likely to perpetrate fraudulent financial reporting? In the fraud triangle, fraudulent financial reporting and misappropriation of assets: Fraud is more prevalent in smaller businesses and not-for-profit organizations because it is more difficult for them to maintain: Companies may intentionally understate earnings when income is high to create ________ that may be used in future years to increase earnings. Most cases of fraudulent reporting involve: Which of the following questions is the auditor notrequired to ask company management when assessing fraud risk? Which of the following parties is responsible for implementing internal controls to minimize the likelihood of fraud? Which of the following best defines fraud in a financial statement auditing context?