Module 3 Gleim Review for Quiz –
Audit well answered
Which of the following statements reflects an auditor's responsibility for detecting fraud and
errors? - correct answer ✔✔An auditor should design the audit to provide reasonable assurance
of detecting fraud and errors that are material to the financial statements.
Because of the risk of material misstatement due to fraud, an audit of financial statements in
accordance with generally accepted auditing standards should be planned and performed with
an attitude of - correct answer ✔✔Professional skepticism
Which of the following statements is correct concerning an auditor's responsibility to report
fraud? - correct answer ✔✔The disclosure of fraudulent activities to parties other than the
client's senior management and its audit committee is not ordinarily part of the auditor's
responsibility.
Which of the following circumstances is most likely to cause an auditor to consider whether a
material misstatement exists? - correct answer ✔✔Transactions selected for testing are not
supported by proper documentation.
The independent auditor's plan for an audit in accordance with GAAS is influenced by the
possibility of material misstatements. The auditor will therefore conduct the audit - correct
answer ✔✔With an attitude of professional skepticism.
Which of the following circumstances would most likely cause an auditor to suspect that fraud
exists in a client's financial statements? - correct answer ✔✔Significantly fewer responses to
confirmation requests are received than expected.
, Which of the following would be least likely to suggest to an auditor that the client's
management may have overridden internal control? - correct answer ✔✔Differences are always
disclosed on a computer exception report.
Which of the following characteristics most likely would heighten an auditor's concern about
the risk of intentional manipulation of financial statements? - correct answer ✔✔Management
places substantial emphasis on meeting earnings projections.
In a financial statement audit, substantial consideration must be given to potential fraud. The
conditions for fraud ordinarily include - correct answer ✔✔The ability to rationalize commission
of fraud.
Prior to, or in conjunction with, the information-gathering procedures for an audit, audit team
members should discuss the potential for material misstatement due to fraud. Which of the
following best characterizes the mind-set that the audit team should maintain during this
discussion? - correct answer ✔✔questioning
Which of the following parties should an auditor notify first when discovering an immaterial
fraud is committed by an accounting clerk? - correct answer ✔✔An appropriate level of
management.
What is the definition of fraud in an audit of financial statements? - correct answer ✔✔An
intentional act that results in a material misstatement in financial statements that are the
subject of an audit.
Which of the following circumstances most likely will cause an auditor to consider whether
material misstatements due to fraud exist in an entity's financial statements? - correct answer
✔✔Transactions selected for testing are not supported by proper documentation.
Disclosure of possible fraud to parties other than the client's senior management and those
charged with governance ordinarily is not part of an auditor's responsibility. However, to which
of the following outside parties may a duty to disclose possible fraud exist?
Audit well answered
Which of the following statements reflects an auditor's responsibility for detecting fraud and
errors? - correct answer ✔✔An auditor should design the audit to provide reasonable assurance
of detecting fraud and errors that are material to the financial statements.
Because of the risk of material misstatement due to fraud, an audit of financial statements in
accordance with generally accepted auditing standards should be planned and performed with
an attitude of - correct answer ✔✔Professional skepticism
Which of the following statements is correct concerning an auditor's responsibility to report
fraud? - correct answer ✔✔The disclosure of fraudulent activities to parties other than the
client's senior management and its audit committee is not ordinarily part of the auditor's
responsibility.
Which of the following circumstances is most likely to cause an auditor to consider whether a
material misstatement exists? - correct answer ✔✔Transactions selected for testing are not
supported by proper documentation.
The independent auditor's plan for an audit in accordance with GAAS is influenced by the
possibility of material misstatements. The auditor will therefore conduct the audit - correct
answer ✔✔With an attitude of professional skepticism.
Which of the following circumstances would most likely cause an auditor to suspect that fraud
exists in a client's financial statements? - correct answer ✔✔Significantly fewer responses to
confirmation requests are received than expected.
, Which of the following would be least likely to suggest to an auditor that the client's
management may have overridden internal control? - correct answer ✔✔Differences are always
disclosed on a computer exception report.
Which of the following characteristics most likely would heighten an auditor's concern about
the risk of intentional manipulation of financial statements? - correct answer ✔✔Management
places substantial emphasis on meeting earnings projections.
In a financial statement audit, substantial consideration must be given to potential fraud. The
conditions for fraud ordinarily include - correct answer ✔✔The ability to rationalize commission
of fraud.
Prior to, or in conjunction with, the information-gathering procedures for an audit, audit team
members should discuss the potential for material misstatement due to fraud. Which of the
following best characterizes the mind-set that the audit team should maintain during this
discussion? - correct answer ✔✔questioning
Which of the following parties should an auditor notify first when discovering an immaterial
fraud is committed by an accounting clerk? - correct answer ✔✔An appropriate level of
management.
What is the definition of fraud in an audit of financial statements? - correct answer ✔✔An
intentional act that results in a material misstatement in financial statements that are the
subject of an audit.
Which of the following circumstances most likely will cause an auditor to consider whether
material misstatements due to fraud exist in an entity's financial statements? - correct answer
✔✔Transactions selected for testing are not supported by proper documentation.
Disclosure of possible fraud to parties other than the client's senior management and those
charged with governance ordinarily is not part of an auditor's responsibility. However, to which
of the following outside parties may a duty to disclose possible fraud exist?
