exam 3 312g practice exam with correct answers 2024

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 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 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 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 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 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 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 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 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 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 True - answer-The chief audit executive must establish and maintain a system to monitor the disposition of results communicated to management. True False 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 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 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 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 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 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 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 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 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 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 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 Productive - answer-State agencies overseeing charitable organizations are generally all of the following EXCEPT: a. Inactive b. Understaffed c. Productive d. Ineffective 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 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 Yes - answer-Checks are numbered sequentially Yes No No - answer-Checks are used in numerical sequence No Yes No - answer-System-generated checks are password protected so only cash disbursement custodian can create checks Yes No Yes - answer-Proper approval provided before creating a check Yes No Yes - answer-Supporting documentation is stamped "paid" after creating check Yes No Yes - answer-Copy of each completed check with its supporting documentation is forwarded to recorder No Yes Yes - answer-Check payee, amount, and purpose match supporting documentation Yes No No - answer-Checks are not split No Yes No - answer-Recorder and examiner are provided a listing of completed checks No Yes Yes - answer-Checks are signed only by authorized signer(s) No Yes Yes - answer-Checks over $5,000 require two signatures No Yes No - answer-Checks are distributed immediately in person or via mail No Yes No - answer-Checks are not made payable to cash Yes No No - answer-Checks are not made payable to cash disbursement custodian, his/her relatives, significant others, or other related parties No Yes No - answer-Individuals completing checks, recording checks, signing and delivering checks, and reconciling bank statements are segregated Yes No No - answer-Complete supporting documentation is matched and approved by non-cash disbursement custodian before creating check No Yes No - answer-Blank checks are safeguarded through passwords or locked cabinets and only accessible by the cash disbursement custodian No Yes No - answer-Voided checks are promptly mutilated and retained so they cannot be altered or used Yes No Yes - answer-Organization investigates out-of-sequence or duplicate checks on bank statement Yes No No - answer-All checks are completely filled in with permanent ink and copied before signing and prompt delivery No Yes Yes - answer-Cancelled checks are examined for matching payee, amount, signature, and endorsement Yes No No - answer-Vendor payment complaints investigated by someone independent of purchasing, accounts payable, or cash functions No Yes True - answer-The chief audit executive must effectively manage the internal audit activity to ensure it adds value to the organization. True False 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 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 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 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 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 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 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. 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 No - answer-Blank checks are safeguarded through passwords or locked cabinets and only accessible by the cash disbursement custodian No Yes No - answer-Voided checks are promptly mutilated and retained so they cannot be altered or used Yes No Yes - answer-Organization investigates out-of-sequence or duplicate checks on bank statement Correct! Yes No No - answer-Blank checks are safeguarded through passwords or locked cabinets and only accessible by the cash disbursement custodian No Yes 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 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 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 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 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 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. 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 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 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 Completeness - answer-One of the most important assertions for cash receipts is Classification Uniqueness Occurrence Completeness 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 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 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 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 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 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 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 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 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 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 False - answer-The chief audit executive may communicate the impact of resource limitations to senior management and the board. True False 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 True - answer-Appropriate refers to the mix of knowledge, skills, and other competencies needed to perform the plan. False True True - answer-Resources are effectively deployed when they are used in a way that optimizes the achievement of the approved plan. True False Completeness - answer-Which is the most important management assertion for cash receipts? Authorization Occurrence Completeness Classification 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 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 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 Authorization - answer-What is the most important management assertion for larceny using false voids and refunds? Occurrence Completeness Uniqueness Authorization 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 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 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 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 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 Yes - answer-Cash receipts are numbered sequentially Yes No Yes - answer-Cash receipts are used in numerical sequence Yes No No - answer-System-generated cash receipts are password protected so only cash receipt custodian can create cash receipts Yes No No - answer-Intact bank deposits are made each business day for the full amount of day's cash receipts No Yes Yes - answer-Recorder and examiner are provided a listing of cash receipts and cash deposits No Yes No - answer-Employees who accept customer payments and record the receipt in the customer account cannot adjust customer accounts Yes No No - answer-Employees who accept customer payments and record the receipt in the customer account cannot adjust general ledger No Yes 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 Yes - answer-Duplicate records should be maintained and secured from employees who handle cash transactions Yes No No - answer-Two people open and record all payments received through the mail Yes No No - answer-Monthly statements mailed to customers showing payments and payment complaints investigated by independent employee Yes No No - answer-Cash and accounts receivable personnel do not authorize write off of receivables Yes No No - answer-Cash and accounts receivable personnel do not have access to general ledger system No Yes Yes - answer-Require employees to give receipts for all sales to customers No Yes No - answer-Visibly post notice to customers for free or discounted goods or services if they do not receive a sales receipt Yes No No - answer-Where possible, segregate recording of sale from handling of cash or merchandise Yes No No - answer-Analyze gross margin trends for unusual variances No Yes Yes - answer-Security cameras and frequent visible and covert monitoring of sales transactions Yes No Yes - answer-Cash register tape copied electronically by system No Yes Yes - answer-Register totals checks, credit cards, and cash separately Yes No Yes - answer-Cash counted by register operator and cash custodian and compared to register totals Yes No No - answer-Only one person assigned to each cash drawer with physical or logical protection for each register No Yes Yes - answer-Require distinct log-in codes for each employee and manager, in order to track voids and returns Yes No No - answer-Require customer signature and management approval of all voids and returns in presence of customer No Yes Yes - answer-Original sales receipts required for sales returns and voids No Yes Yes - answer-Require management physical verification of returned items before approving refund No Yes No - answer-Compare sales credit card number with refund credit card number No Yes No - answer-Segregation of duties among those who prepare and take deposit to the bank, record deposit, and reconcile the bank statement No Yes No - answer-Proof of cash reconciles deposits in transit to books for proper cutoff No Yes No - answer-Proof of cash identifies all cash receipts and disbursements and reconciles to records No Yes No - answer-Recorded deposit dates are reconciled with bank statement deposit dates No Yes True - answer-The chief audit executive must establish policies and procedures to guide the internal audit activity. True False 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 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 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 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 Observation - answer-What is the most important type of audit procedure to detect skimming? Confirmation Inspection Inquiry Observation 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 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 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 Tuition reimbursements - answer-Embassy employees embezzled funds from all of the following transactions EXCEPT: Healthcare payments for families Tuition refunds Tuition reimbursements 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 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 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 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 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 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 True - answer-The frequency and content of reporting are determined in discussion with senior management and the board. True False True - answer-The frequency and content of reporting depend on the importance of the information to be communicated. True False 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 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 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 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 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 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 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 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 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 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 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