question

Lack of segregation of duties among those completing checks, recording checks, signing checks, and reconciling bank statements

answer

Which of the following risks allows the perpetrator to hide the theft in the accounting records? a. Checks issued payable to cash b. Lack of segregation of duties among those completing checks, recording checks, signing checks, and reconciling bank statements c. Lack of matching documentation d. Checks made payable to authorized signer

question

Checks created and forged resulting in duplicate or out-of-sequence checks

answer

Which of the following types of fraud would most likely be perpetrated by someone outside the organization? a. Blank checks are not locked in cabinets b. Voided checks are altered and forged c. Checks created and forged resulting in duplicate or out-of-sequence checks d. Blank checks are not safeguarded with passwords

question

Immediate delivery of check to payee after signing

answer

Which of the following procedures best prevents interception of checks? a. Waiting for vendor to contact company before sending check b. Mailing checks the following business day c. Locking checks in cabinet until delivery d. Immediate delivery of check to payee after signing

question

Check made out to an authorized signer and signed by the authorized signer

answer

Which of the following is not a forgery scheme? a. Endorsement made by unauthorized person b. Check signed by unauthorized person c. Authentic check altered by unauthorized person d. Check made out to an authorized signer and signed by the authorized signer

question

Authorized makers have better opportunity than forgers to perpetrate the fraud

answer

Why do authorized maker frauds have a higher likelihood of occurring than forgery frauds? a. Authorized makers have more ethics than forgers to perpetrate the fraud b. Authorized makers have better opportunity than forgers to perpetrate the fraud c. Authorized makers have more need than forgers to perpetrate the fraud d. Authorized makers have more rationalization than forgers to perpetrate the fraud

question

Hard work

answer

According to the case, all of the following disproportionately impact employment opportunities in France EXCEPT: a. Socio-economic status b. Hard work c. Educational background d. Hierarchical society

question

Used his friendly nature to influence back office personnel

answer

Kerviel used all of the following methods to circumvent controls and conceal unauthorized trades EXCEPT: a. Used his friendly nature to influence back office personnel b. Preparing false documents to corroborate trades c. Voiding warning messaged triggered by unauthorized trades d. Created phony emails from superiors authorizing illicit transactions e. Manufacturing impressive impromptu explanations for apparent irregularities

question

Derivatives

answer

French banks are best known for the development of which of the following? a. Derivatives b. Joint auditing c. Stocks d. Bouton Report

question

Protect domestic auditing firms

answer

Why were joint audits primarily developed? a. Improve audit quality b. Improve disclosures c. Protect domestic auditing firms d. Increase audit fees

question

IFRS and U.S. GAAP are equivalent for financial accounting and reporting

answer

What was NOT a major criticism in the case regarding International Financial Reporting Standards (IFRS)? a. IFRS allows creative accountants to use accounting tricks and is a step backward for comparability b. Use of the "true and fair override" resulted in backdated losses that were inappropriate c. IFRS encourages self-interested accounting and financial reporting d. IFRS and U.S. GAAP are equivalent for financial accounting and reporting

question

True

answer

The chief audit executive must establish and maintain a system to monitor the disposition of results communicated to management. True False

question

True

answer

The chief audit executive must establish a follow-up process to monitor and ensure that management actions have been effectively implemented or that senior management has accepted the risk of not taking action. True False

question

True

answer

The internal audit activity must monitor the disposition of results of consulting engagements to the extent agreed upon with the client. True False

question

False

answer

When the chief audit executive concludes that management has accepted a level of risk that may be unacceptable to the organization, the chief audit executive must discuss the matter with the board. True False

question

Management assertions

answer

The identification of risk accepted by management may be observed through all of the following methods EXCEPT: a. Management assertions b. Consulting engagements c. Actions taken by management as a result of prior engagements d. Assurance engagements

question

Matches documentation and approves disbursements

answer

Which of the following is not a compatible function and therefore should be segregated from the other three? a. Approves authorized limits for checks b. Matches documentation and approves disbursements c. Approves cash disbursement policies d. Approves authorized signers on bank account

question

Reconciling bank statement

answer

Which of the following is a detection control? a. Reconciling bank statement b. Signing check c. Authorizing disbursement d.Recording disbursement

question

Unauthorized checks

answer

Investigating out-of-sequence or duplicate checks helps detect which type of fraud? a. Unauthorized checks b. Forged endorsements c. Altered checks d. Authorized maker checks

question

Vendor payment complaints investigated by someone independent of purchasing, accounts payable, or cash functions

answer

Which is the best control to detect endorsement forgeries? a. All checks are completely filled in with permanent ink and copied before signing and prompt delivery b. Organization investigates out-of-sequence or duplicate checks on bank statement c. Vendor payment complaints investigated by someone independent of purchasing, accounts payable, or cash functions d. Cancelled checks are examined for matching payee, amount, signature, and endorsement

question

Checks are altered after signing

answer

Which is not a red flag for authorized maker fraud schemes? a. Checks are made payable to cash disbursement custodian b. Checks are made payable to cash c. Checks are altered after signing d. Checks are made payable to relatives of cash disbursement custodian

question

Donated large amounts of money to the organization

answer

The individual who embezzled funds from the East Lansing, Michigan chapter of the United Way did all of the following EXCEPT: a. Wrote checks to herself b. Forged signatures of check cosigners c. Donated large amounts of money to the organization d. Kept the organization's books e. Destroyed cancelled checks mailed back by bank

question

The charitable sector has strong regulatory oversight

answer

Which of the following statements is false? a. Annual theft losses for charitable organizations is approximately $40 billion annually b. 95% of losses suffered by charities result from cash thefts c. The charitable sector has strong regulatory oversight d. A research study estimates that one in eight dollars contributed to charitable organizations is stolen each year e. The perpetrator for charity thefts generally serves in a financial function

question

Productive

answer

State agencies overseeing charitable organizations are generally all of the following EXCEPT: a. Inactive b. Understaffed c. Productive d. Ineffective

question

Tax status

answer

Which is not a major problem faced by United Way? a. Intense and growing competition for donations b. Tax status c. Highly publicized and embarrassing embezzlements

question

Controls are adequate for most charities

answer

Which of the following statements is false? a. Charities reduced administrative costs including accounting and control costs b. Many charities have inadequate or non-existant internal controls c. Controls are adequate for most charities d. Fewer than 15% of United Way of America local chapters have written accounting and control policies

question

Yes

answer

Checks are numbered sequentially Yes No

question

No

answer

Checks are used in numerical sequence No Yes

question

No

answer

System-generated checks are password protected so only cash disbursement custodian can create checks Yes No

question

Yes

answer

Proper approval provided before creating a check Yes No

question

Yes

answer

Supporting documentation is stamped "paid" after creating check Yes No

question

Yes

answer

Copy of each completed check with its supporting documentation is forwarded to recorder No Yes

question

Yes

answer

Check payee, amount, and purpose match supporting documentation Yes No

question

No

answer

Checks are not split No Yes

question

No

answer

Recorder and examiner are provided a listing of completed checks No Yes

question

Yes

answer

Checks are signed only by authorized signer(s) No Yes

question

Yes

answer

Checks over $5,000 require two signatures No Yes

question

No

answer

Checks are distributed immediately in person or via mail No Yes

question

No

answer

Checks are not made payable to cash Yes No

question

No

answer

Checks are not made payable to cash disbursement custodian, his/her relatives, significant others, or other related parties No Yes

question

No

answer

Individuals completing checks, recording checks, signing and delivering checks, and reconciling bank statements are segregated Yes No

question

No

answer

Complete supporting documentation is matched and approved by non-cash disbursement custodian before creating check No Yes

question

No

answer

Blank checks are safeguarded through passwords or locked cabinets and only accessible by the cash disbursement custodian No Yes

question

No

answer

Voided checks are promptly mutilated and retained so they cannot be altered or used Yes No

question

Yes

answer

Organization investigates out-of-sequence or duplicate checks on bank statement Yes No

question

No

answer

All checks are completely filled in with permanent ink and copied before signing and prompt delivery No Yes

question

Yes

answer

Cancelled checks are examined for matching payee, amount, signature, and endorsement Yes No

question

No

answer

Vendor payment complaints investigated by someone independent of purchasing, accounts payable, or cash functions No Yes

question

True

answer

The chief audit executive must effectively manage the internal audit activity to ensure it adds value to the organization. True False

question

The internal audit activity conforms with the Standards and the Code of Ethics

answer

The internal audit activity is effectively managed when it does all of the following EXCEPT: a. The results of the internal audit activity's work achieve the purpose and responsibility included in the internal audit charter b. The internal audit activity conforms with the Definition of Internal Auditing and the Standards c. The individuals who are part of the internal audit activity demonstrate conformance with the Code of Ethics and the Standards d. The internal audit activity conforms with the Standards and the Code of Ethics

question

True

answer

The internal audit activity adds value to the organization (and its stakeholders) when it provides objective and relevant assurance, and contributes to the effectiveness and efficiency of governance, risk management, and control processes True False

question

Inspect cancelled checks for authorized endorsements

answer

All of the following are key audit procedures for authorized maker schemes EXCEPT: a. Analyze cash disbursements for checks made payable to cash disbursement custodian b. Review segregation of duties chart for individuals performing incompatible duties c. Analyze cash disbursements for checks made payable to cash or in the name of the organization d. Inspect cancelled checks for authorized endorsements

question

Inspect cancelled checks for matching payee and amount

answer

The most important audit test for detecting alteration forgeries is a. Evaluate the adequacy of security of blank checks b. Inspect cancelled checks for matching payee and amount c. Analyze bank statements for out of sequence or duplicate checks d. Observe vendor complaint process

question

For a sample of cash disbursements, inspect supporting invoices for "paid" stamp

answer

All of the following are examples of authorization audit procedures EXCEPT: a. Inspect cancelled checks for authorized signatures b. For cash disbursements over $5,000, inspect cancelled checks for two authorized signatures c. Analyze checks for payments to same vendor within one week where combined amounts exceed check authorization limit d. For a sample of cash disbursements, inspect supporting invoices for "paid" stamp

question

Observe check creation and delivery process

answer

The most important audit procedure to evaluate the prevention of intercepted checks-alteration and endorsement forgeries is a. Analyze bank statements for out of sequence or duplicate checks b. Read vendor payment complaint policies/processes and observe vendor payment complaint process to assess appropriate segregation of duties c. Observe check creation and delivery process d. For a sample of cash disbursements, compare cancelled check to cash disbursements journal for matching payee and amount. Also, inspect for authorized signature and endorsement

question

Review segregation of duties chart for individuals performing incompatible duties. While reviewing approvals, compare to segregation of duties chart.

answer

The most important audit procedure to evaluate the prevention of authorized maker schemes is a. For a sample of cash disbursements, inspect cancelled checks for authorized signatures b. Analyze cash disbursements for checks made payable to cash or in the name of the organization c. Analyze cash disbursements for checks made payable to cash disbursement custodian, his/her relatives, significant others, or other related parties or for their personal benefit d. Review segregation of duties chart for individuals performing incompatible duties. While reviewing approvals, compare to segregation of duties chart.

question

Prepared payroll checks

answer

A lack of segregation of duties allowed the Financial Secretary at Timpview High School to do all of the following incompatible duties EXCEPT: Prepared and signed checks Prepared bank reconciliation Entereasdd transactions, made adjustments and writeoffs, and had sole custody of the general ledger system Correct! Prepared payroll checks

question

No

answer

Blank checks are safeguarded through passwords or locked cabinets and only accessible by the cash disbursement custodian No Yes

question

No

answer

Voided checks are promptly mutilated and retained so they cannot be altered or used Yes No

question

Yes

answer

Organization investigates out-of-sequence or duplicate checks on bank statement Correct! Yes No

question

No

answer

Blank checks are safeguarded through passwords or locked cabinets and only accessible by the cash disbursement custodian No Yes

question

Reimbursements and disbursements initiated by the Principal are approved by a supervisor

answer

All of the following were noted as inadequate internal controls by the internal auditors EXCEPT: a. Reimbursements and disbursements initiated by the Principal are approved by a supervisor b. The Timpview High School (THS) Financial Secretary reported that THS does not have petty cash funds. Instead, checks are written to the bank and cashed for petty cash type transactions, travel advances, and change fund establishment. c. There is a charge account at a local gas station for driver's education fuel charges. There are no logs, receipt copies, or any sort of reconciliation methods currently in use to track what charges are being made to the account, or to provide any method by which the Drivers Education Coordinator could review and approve monthly invoices. A risk exists that unauthorized users could make charges to the THS account that would remain undetected d. Approvals for many purchases or reimbursements are obtained after the purchases have already occurred, effectively making any effort to monitor or approve purchases meaningless

question

Undocumented payment of $10,000 to principal

answer

Timpview High School questionable or unusual expenditures included all of the following EXCEPT: a. Flooring for football complex for $4,000 was billed to a third party b. Undocumented payment of $10,000 to principal c. Check payable to bank for $300 d. Personal vehicle repairs paid by Timpview High School totaling $759.84

question

Artificially reduced expenditures in the football activity account

answer

What were some of the effects of unsupported journal entries and transfers? a. More expenses were transferred from the administration to football than vice versa b. Transferred expenses from football to girls basketball c. Artificially reduced expenditures in the football activity account d. Transferred $10,000 in fundraising money from football to soccer

question

Football and drivers education had different fiscal custodians

answer

Which of the following is false regarding the sampling of expenditure transactions for football and drivers education? a. Tested 85 items b. Tested 53 percent of expenditure dollars c. Football and drivers education had different fiscal custodians d. Tested 11 percent of transactions

question

False

answer

The chief audit executive must establish a risk-based plan to determine the priorities of the internal audit activity, inconsistent with the organization's goals. True False

question

The chief executive officer is responsible for developing a risk-based plan.

answer

Which of the following is false? a. The chief audit executive takes into account the organization's risk management framework, including using risk appetite levels set by management for the different activities or parts of the organization. b. The chief executive officer is responsible for developing a risk-based plan. c. If a framework does not exist, the chief audit executive uses his/her own judgment of risks after consideration of input from senior management and the board. d. The chief audit executive must review and adjust the plan, as necessary, in response to changes in the organization's business, risks, operations, programs, systems, and controls.

question

True

answer

The internal audit activity's plan of engagements must be based on a documented risk assessment, undertaken at least annually. The input of senior management and the board must be considered in this process. True False

question

True

answer

The chief audit executive must identify and consider the expectations of senior management, the board, and other stakeholders for internal audit opinions and other conclusions. True False

question

True

answer

The chief audit executive should consider accepting proposed consulting engagements based on the engagement's potential to improve management of risks, add value, and improve the organization's operations. Accepted engagements must be included in the plan. True False

question

Completeness

answer

One of the most important assertions for cash receipts is Classification Uniqueness Occurrence Completeness

question

Skimming transactions are not recorded but larceny transactions are recorded

answer

Which of the following is true? Both skimming and larceny transactions are recorded Larceny transactions are not recorded, but skimming transactions are recorded Neither skimming nor larceny transactions are recorded Skimming transactions are not recorded but larceny transactions are recorded

question

Not posting receipt to customer account

answer

All of the following are methods for hiding larceny of accounts receivable thefts EXCEPT: Making unauthorized adjustment to customer account Not posting receipt to customer account Destroying records Making unauthorized adjustment to general ledger

question

Not recording the sale

answer

All of the following are methods for hiding theft for a larceny of sales scheme EXCEPT: Altering the cash count Not recording the sale Replacing stolen cash with false checks Altering or destroying cash register tapes

question

Employee deposits unexpected receipts then withdraws and steals the amount deposited

answer

All of the following are methods for stealing recorded deposits EXCEPT: Employee steals the deposit then hides the theft by replacing it with the following day's deposit Employee deposits unexpected receipts then withdraws and steals the amount deposited Employee steals cash from the deposit and hides the theft by adjusting the records or reconciliation Employee steals cash from the deposit and uses deposits in transit to hide the theft

question

Significantly increased profits

answer

Campbell made all of the following strategic changes during the early to mid-1980s EXCEPT: Financed an aggressive expansion program Sold debt securities for the first time Released more than 300 new products Significantly increased profits

question

Trade loading improved long term revenues and profitability

answer

All of the following are true regarding trade discounts EXCEPT: Trade discounts were used when a company appeared to fall short of revenue or expense targets Trade discounts were offered at the end of account period to entice customers to buy items they would otherwise defer Excessive trade loading made it difficult for Campbell to meet revenue and earnings profits Trade loading improved long term revenues and profitability

question

Large trade discounts recorded as reductions of gross revenue

answer

All of the following were violations of generally accepted accounting principles EXCEPT: Large trade discounts recorded as reductions of gross revenue Shipping to the yard Large trade discounts recorded as selling, general and administrative expenses Guaranteed sales

question

Goods shipped FOB destination on 12/31/12 arrived at customer place of business on 1/3/13

answer

Sales for a shipment on 12/31/12 were booked as revenue on 12/31/12. Which of the following situations would cause sales at 12/31/12 to be overstated? Goods shipped FOB destination on 12/31/12 arrived at customer place of business on 12/31/12 Goods shipped FOB destination on 12/31/12 arrived at customer place of business on 1/3/13 Goods shipped FOB shipping point on 12/31/12 arrived at customer place of business on 12/31/12 Goods shipped FOB shipping point on 12/31/12 arrived at customer place of business on 1/3/13

question

Company did not record appropriate sales return reserves

answer

What was the major reporting problem with the "guaranteed sales?" Guaranteed sales involved shipping orders to the warehouse The practice is fraudulent Customers did not have an unconditional right of return of the product Company did not record appropriate sales return reserves

question

True

answer

The chief audit executive must communicate the internal audit activity's plans and resource requirements, including significant interim changes, to senior management and the board for review and approval. True False

question

False

answer

The chief audit executive may communicate the impact of resource limitations to senior management and the board. True False

question

Timely

answer

In order to achieve the approved plan, the chief audit executive must ensure that internal audit resources are all of the following EXCEPT: Sufficient Effectively employed Appropriate Timely

question

True

answer

Appropriate refers to the mix of knowledge, skills, and other competencies needed to perform the plan. False True

question

True

answer

Resources are effectively deployed when they are used in a way that optimizes the achievement of the approved plan. True False

question

Completeness

answer

Which is the most important management assertion for cash receipts? Authorization Occurrence Completeness Classification

question

Record the receipt of cash

answer

Which of the following would not be a segregation of issues problem for someone who accepts cash receipts? Record the receipt of cash Reconcile the bank statement Adjust the customer account for returns and voids Adjust the general ledger

question

Monthly statements mailed to customers showing payments and payment complaints investigated by independent employee

answer

What is the most important detection control for accounts receivable skimming? Cash and accounts receivable personnel do not have access to general ledger system Cash and accounts receivable personnel do not authorize write off of receivables Monthly statements mailed to customers showing payments and payment complaints investigated by independent employee Two people open and record all payments received through the mail

question

Visibly post notice to customers for free or discounted goods or services if they do not receive a sales receipt

answer

What is the most important detection control for sales skimming? Require employees to give receipts for all sales to customers Cash register tape copied electronically by system Visibly post notice to customers for free or discounted goods or services if they do not receive a sales receipt Security cameras and frequent visible and covert monitoring of sales transactions

question

Authorization

answer

What is the most important management assertion for larceny using false voids and refunds? Occurrence Completeness Uniqueness Authorization

question

Troberg Stores caused Kirby to take the polygraph examination

answer

For which of the following allegations did the judge rule in favor of Troberg Stores? Troberg Stores caused Kirby to take the polygraph examination Troberg disciplined Kirby on the basis of the polygraph results None of the above Troberg improperly used the polygraph results Troberg constructively discharged Kirby on the basis of the polygraph results

question

None of the answers are exceptions to the EPPA

answer

The Employee Polygraph Protection Act (EPPA) makes it unlawful, unless otherwise excepted by the act, for any employer engaged in commerce to do all of the following EXCEPT: Directly or indirectly to require, request, suggest, or cause any employee or prospective employee to take or submit to any lie detector test To dischare, disicipline, discriminate against in any manner, or deny employment or promotion to, or threaten to take any action against any employee or prospective employee on the basis of the results of any lie detector test To dischare, disicipline, discriminate against in any manner, or deny employment or promotion to, or threaten to take any action against any employee or prospective employee who refuse, declines, or fails to take or submit to any lie detector test None of the answers are exceptions to the EPPA To use, accept, refer to, or inquire concerning the results of any lie detector test of any employee or prospective employee

question

The employee volunteers to participate in a polygraph test

answer

EPPA Sections 2006 and 2009 do not prohibit an employer from requesting an employee to submit to a polygraph test if it follows all of the following steps EXCEPT: The employer had a reasonable suspicion that the employee was involved in the incident or activity under investigation The employer executes a statement provided to the examinee that meets multiple criteria stated in the EPPA The employee had access to the property that is the subject of the investigation The employee volunteers to participate in a polygraph test

question

The judge only awarded damages for lost wages and employment benefits

answer

The judge in the case noted all of the following EXCEPT: Troberg could have taken advantage of the EPPA ongoing investigation exemption with little risk of legal reprisal The judge only awarded damages for lost wages and employment benefits Kirby may have committed theft from the cash register Troberg could have dismissed Kirby immedialey following the May 1995 theft with little risk of repurcussion

question

Segregation of duties

answer

Which of the following internal controls would have best reduced the likelihood of Troberg's cash thefts? Proper reconciliation of cash receipts Proper recording of sales Segregation of duties Invigilation

question

Yes

answer

Cash receipts are numbered sequentially Yes No

question

Yes

answer

Cash receipts are used in numerical sequence Yes No

question

No

answer

System-generated cash receipts are password protected so only cash receipt custodian can create cash receipts Yes No

question

No

answer

Intact bank deposits are made each business day for the full amount of day's cash receipts No Yes

question

Yes

answer

Recorder and examiner are provided a listing of cash receipts and cash deposits No Yes

question

No

answer

Employees who accept customer payments and record the receipt in the customer account cannot adjust customer accounts Yes No

question

No

answer

Employees who accept customer payments and record the receipt in the customer account cannot adjust general ledger No Yes

question

No

answer

Bank accounts are reconciled on a monthly basis using a proof of cash by an employee who does not handle cash receipts or disbursements Yes No

question

Yes

answer

Duplicate records should be maintained and secured from employees who handle cash transactions Yes No

question

No

answer

Two people open and record all payments received through the mail Yes No

question

No

answer

Monthly statements mailed to customers showing payments and payment complaints investigated by independent employee Yes No

question

No

answer

Cash and accounts receivable personnel do not authorize write off of receivables Yes No

question

No

answer

Cash and accounts receivable personnel do not have access to general ledger system No Yes

question

Yes

answer

Require employees to give receipts for all sales to customers No Yes

question

No

answer

Visibly post notice to customers for free or discounted goods or services if they do not receive a sales receipt Yes No

question

No

answer

Where possible, segregate recording of sale from handling of cash or merchandise Yes No

question

No

answer

Analyze gross margin trends for unusual variances No Yes

question

Yes

answer

Security cameras and frequent visible and covert monitoring of sales transactions Yes No

question

Yes

answer

Cash register tape copied electronically by system No Yes

question

Yes

answer

Register totals checks, credit cards, and cash separately Yes No

question

Yes

answer

Cash counted by register operator and cash custodian and compared to register totals Yes No

question

No

answer

Only one person assigned to each cash drawer with physical or logical protection for each register No Yes

question

Yes

answer

Require distinct log-in codes for each employee and manager, in order to track voids and returns Yes No

question

No

answer

Require customer signature and management approval of all voids and returns in presence of customer No Yes

question

Yes

answer

Original sales receipts required for sales returns and voids No Yes

question

Yes

answer

Require management physical verification of returned items before approving refund No Yes

question

No

answer

Compare sales credit card number with refund credit card number No Yes

question

No

answer

Segregation of duties among those who prepare and take deposit to the bank, record deposit, and reconcile the bank statement No Yes

question

No

answer

Proof of cash reconciles deposits in transit to books for proper cutoff No Yes

question

No

answer

Proof of cash identifies all cash receipts and disbursements and reconciles to records No Yes

question

No

answer

Recorded deposit dates are reconciled with bank statement deposit dates No Yes

question

True

answer

The chief audit executive must establish policies and procedures to guide the internal audit activity. True False

question

Budget of the internal audit activity

answer

The form and content of policies and procedures are dependent upon all of the following EXCEPT: Budget of the internal audit activity Complexity of the work Size of the internal audit activity Structure of the internal audit activity

question

True

answer

The chief audit executive should share information and coordinate activities with other internal and external providers of assurance and consulting services to ensure proper coverage and minimize duplication of efforts. True False

question

True

answer

When an external service provider serves as the internal audit activity, the provider must make the organization aware that the organization has the responsibility for maintaining an effective internal audit activity. True False

question

Skimming of sales

answer

The transaction is not recorded in the records for which type of fraud? Larceny of accounts receivable Larceny of cash deposits Skimming of sales Larceny of sales

question

Observation

answer

What is the most important type of audit procedure to detect skimming? Confirmation Inspection Inquiry Observation

question

Compare ending bank reconciliation to balance per books

answer

Which of the following types of audit procedures is NOT designed to assess bank deposit skimming or larceny? Investigate deposits in transit that do not clear the bank on the following bank business day Compare ending bank reconciliation to balance per books Review proof of cash for cash receipts and cash disbursements that are not recorded in the organization records Observe cash deposit process to assess whether or not the process is in compliance with the segregation of duties chart

question

Hides the theft by replacing stolen cash with false checks

answer

The main reason for tracing a sample of the day's sales total checks, credit card transactions, and cash transactions to the bank deposit is to assess which risk event? Hides the theft by altering the cash count Hides the theft by replacing stolen cash with false checks Hides cash receipts theft by altering or destroying cash register tapes Employee steals cash from registers not assigned to him so the theft cannot be traced to him

question

Skimming of sales

answer

If an auditor notices a decrease in gross margin over time, it could indicate Skimming of sales Larceny of deposits Decrease in cost of goods sold Larceny of sales

question

Tuition reimbursements

answer

Embassy employees embezzled funds from all of the following transactions EXCEPT: Healthcare payments for families Tuition refunds Tuition reimbursements

question

El-Hadad

answer

Who was not immediately terminated from employment because of the embezzlements? Deputy cultural attache El-Hadad Embassy's chief accountant Cultural attache

question

Falsifying his own performance evaluations

answer

El-Hadad was accusued of all of the following EXCEPT: Expense reimbursements to which he was not entitled Compensation for overtime he had not worked Falsifying his own performance evaluations Payment of healthcare premiums for his family

question

The federal court did not have jurisdiction in the case

answer

The federal judge ruled in favor of El-Hadad in all of the following areas EXCEPT: El-Hadad had been defamed by former employer El-Hadad had been victimized by false charges intended to discredit him The federal court did not have jurisdiction in the case Defamation by former employer ended El-Hadad's career

question

Sovereign immunity because it was a foreign embassy

answer

How did the UAE attorneys attempt to have the lawsuit dismissed? Sovereign immunity because it was a foreign embassy El-Hadad did not pay U.S. income taxes El-Hadad was employed by a foreign government Commercial activity exception

question

Internal audit activity's budget

answer

The chief audit executive must report periodically to senior management and the board on all of the following relative to its plan EXCEPT: Internal audit activity's budget Internal audit activity's responsibility Internal audit activity's authority Internal audit activity's purpose Internal audit activity's performance

question

Time spent on audits

answer

Reporting to senior management and the board must include all of the following EXCEPT: Time spent on audits Other matters needed or requested by senior management and the board Governance issues Significant risk exposures Fraud risks Significant control issues

question

True

answer

The frequency and content of reporting are determined in discussion with senior management and the board. True False

question

True

answer

The frequency and content of reporting depend on the importance of the information to be communicated. True False

question

True

answer

The frequency and content of reporting depend on the urgency of the related actions to be taken by senior management or the board. True False

question

Existence and Valuation

answer

What are the primary management assertions for cash balances? Completeness and Rights and Obligations Existence and Presentation and Disclosure Existence and Valuation Completeness and Valuation

question

Authorized signor mails the confirmation

answer

Which of the following steps is not part of the confirmation process for cash balances? The mailed envelope included a stamped envelope addressed directly to the auditor Auditor uses the "Standard Form to Confirm Account Balance Information with Financial Institutions" The authorized signor signs the form in the presence of the auditor Authorized signor mails the confirmation

question

Used to audit deposits in transit and outstanding checks

answer

What is the primary purpose of the cutoff bank statement? Used in the proof of cash to reconcile cash receipts and cash disbursements Confirms ending cash balance Used to audit deposits in transit and outstanding checks Used to detect unrecorded receipts and disbursements

question

Uncovers incorrectly recorded interbank transfers

answer

Which of the following is not a benefit of a proof of cash? Uncovers incorrectly recorded interbank transfers Auditor can trace cash receipts and cash disbursements directly to respective journals Helps detect unrecorded cash receipts and cash disbursements Provides a separate reconciliation of cash receipts and cash disbursements

question

Cash deposit per books recorded in December and corresponding cash disbursement per books recorded the following January

answer

For financial reporting purposes, which if the most serious concern for the auditor regarding the interbank transfer schedule? Cash disbursement per bank recorded in December and corresponding cash deposit per bank recorded the following January Cash deposit per bank recorded in December and corresponding cash disbursement per bank recorded the following January Cash disbursement per books recorded in December and corresponding cash deposit per books recorded the following January Cash deposit per books recorded in December and corresponding cash disbursement per books recorded the following January

question

Maintaining a vault general ledger proof sheet that reconciled with cash on hand

answer

According to the case, all of the following practices were unusual or not normal EXCEPT: Substantial portion of bank's cash was inaccessible for an extended period of time Segregating a large amount of cash in the locked cabinet Substantial portion of bank's assets were not invested and earning interest for an extended period of time Maintaining a vault general ledger proof sheet that reconciled with cash on hand

question

Placed audit seals on the doors of the cabinet

answer

When the internal auditors could not count the cash that was supposedly locked in the cabinet during their surprise count, what should they have done? Performed a surprise cash count at another location Counted the cash when the person with the key returned Accepted management's representation that the cash was in the locked cabinet without doing additional procedures Placed audit seals on the doors of the cabinet

question

The amount of cash in the locked cabinet on January 14, 1988 was $2.7 million

answer

Which of the following was NOT a deception on the part of the bank's employees? The amount of cash in the locked cabinet on January 14, 1988 was $2.7 million Explanation for why a large amount of cash was segregated in the locked cabinet Description of the three key security system Concealment of the cash shortage by Cordova and subordinates

question

Obtained documentation for the liability from CNB personnel

answer

The staff auditors failed to do all of the following EXCEPT: Confirmed liability with customer Obtained documentation for the liability from CNB personnel Confirmed that customer cashed a large certificate of deposit Acquired corroboraing evidence for customer's planned use of funds

question

Cardova was not prohibited from serving as an officer or director of a public company

answer

Which of the following is false? CapitalBank was declared insolvent and place under control of FDIC Cardova was not prohibited from serving as an officer or director of a public company Cardova pleaded guilty to bank fraud and conspiracy to commit bank fraud Cardova missappropriated at least $400,000

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