(Top QUALITY 2024/2025 EXAM REVIEW) WGU C254 Fraud and Forensic Accounting, Questions and answers, Rated A+

WGU C254 Fraud and Forensic Accounting, Questions and answers, Rated A+ Which action is potentially unethical because it understates COGS? A. Understating purchases B. Understating purchase returns C. Understating ending inventory D. Understating purchase discounts - -A Why is it unethical for a supervisor to ask an accountant to capitalize the marketing research program? A. this action overstates assets B. this action overstates expenses C. this action understates liabilities D. this action understates net income - -A How can financial statement fraud impact stakeholders? A. investors may experience lower interest rates B. fraud can be an embarrassment to the audit profession C. investors may be more willing to purchase new stock issues D. fraud can lead to stock options decreasingly being used for executive compensation - -B How do fraudulent financial statements impact stakeholders and the markets? A. financial statement fraud leads to embezzlement B. interest rates rise as a result of financial statement fraud C. financial statement fraud leads investors to lose confidence D. CEOs acquire additional company stock following financial statement fraud - -C What is a consequence of financial statement fraud? A. the organization shows losses due to embezzlement B. red flags prove that fraud occurred in the organization C. suppliers are able to take advantage of the organization D. the organization appears more profitable than it actually is - -D What are two potential consequences a company accused of financial statement fraud can face? A. the CEO might be indicted and convicted B. the SEC might relist and refinance the company C. company stock price might decline when news of fraud reaches the press D. the company may be required to issue new stock to provide needed funds - -A and C What is motivation behind committing fraud through backdating of stock options? A. giving bonuses to employees B. increasing executive compensation C. ensuring a successful stock issuance D. preventing a violation of debt covenants - -B What is a common motivator of financial statement fraud? A. greed B. intelligence C. health issues D. sense of entitlement - -A What is the most common method used to commit financial statement fraud, according to the COSO study? A. capitalizing expenses B. overstating existing assets C. improperly recognizing revenue D. failing to give complete disclosure - -C What was the auditor's responsibility to detect fraud under SAP 30? A. to thoroughly interview key employees B. to conduct statistical regression models C. to be aware of the possibility that irregularities may exist D. to determine if management was giving false statements - -C What were auditors required to do under SAP 30? A. test for fraud until it is found B. design tests to detect fraud C. maintain a high level of mistrust in management D. assume increased responsibility to detect fraud - -B Prior to the Sarbanes-Oxley regulations and according to SAS 16, under what circumstances can auditors rely upon the truthfulness of records obtained from the client? A. until there is evidence to suggest otherwise B. after a thorough internal control investigation C. after management has taken polygraph examinations D. once substantial testing on the reliability of records has been conducted - -A What level of assurance must an auditor provide regarding the absence of fraud after the issuance of SAS 53? A. minimal assurance B. absolute assurance C. plausible assurance D. reasonable assurance - -D Which standard recognizes that GAAS auditors are not required to detect all material financial statement frauds, especially frauds involving forgery or collusion? A. SAS 16 B. SAS 53 C. SAS 82 D. SAS 99 - -C What is required of the auditor when interacting with management according to SAS 82? A. the auditor should discuss the risks of material misstatement with the auditing team B. the auditor should ask the management team if any fraud risk factors exist, such as bonuses or incentives C. the auditor should present a list of questions about red flags that should be considered during the audit phase D. the auditor should ask the management team what they perceive to be the company's greatest fraud exposures - -D According to SAS 99, why is brainstorming important to auditors? A. to close the expectation gap of financial statements reporting B. to avoid overreacting to the red flags that occur in the audit C. to comprehend the registration process of public accounting firms D. to document findings among auditors to increase the likelihood of detecting fraud - -B Which activity is a major source of fraud that the auditor has the responsibility to detect, according to SAS 99? A. using non-GAAP accounting procedures B. failing to maintain strict payroll recording procedures C. recording entries that override management controls and procedures D. Destroying source documents used in the evaluation of internal controls - -C Who is required to certify a company's financial statements under the Sarbanes-Oxley Act? A. the board of directors B. CEO/CFO or management C. the audit committee of the board of directors D. the engagement audit partner or reviewing auditor - -B What was the major purpose in creating the Sarbanes-Oxley Act? A. to protect the interest of investors B. to allow greater self-regulation of the audit profession C. to create new and more rigorous generally accepted audit standards D. to increase the responsibility of the P