Question

What is the most likely opportunity for theft or fraud by employees?

Multiple Choice

• The belief that the theft is a common practice.
• Needlessly complex transactions.
• Access to assets that are easily traced.
• Stock options that expire soon after the release of financial statements.

What objectives of controls are of primary interest to an auditor performing a financial statement audit?

Multiple Choice

• Effective and efficient operations
• Accurate and reliable financial reporting
• Compliance with applicable laws and regulations
• Prevention or detection and timely correction of errors and fraud

Which of the following audit procedures is most likely to be conducted only after year-end?

Multiple Choice

• Evaluation of management’s adjusting journal entries to the financial statements.
• Accounts receivable confirmations as evidence of existence and valuation of balance sheet accounts receivable balance.
• Testing of property, plant, and equipment disposals to validate balance sheet PP&E account.
• Analysis of stockholders’ equity transactions to validate balance sheet equity accounts.

Answer 1

What is the most likely opportunity for theft or fraud by employees?

a)The belief that the theft is a common practice. - is a rationalisation not an opportunity.

b)Needlessly complex transactions. - Complex transactions are difficult to understand and this creates an opportunity to deciceive and theft.

c)Access to assets that are easily traced. - it is easy for prosecution which discourages to make theft.

d)Stock options that expire soon after the release of financial statements. - it does not create any opportunity for theft.

Hence option b is correct

What objectives of controls are of primary interest to an auditor performing a financial statement audit?

The main objectives of controls which are of primary interst to an auditor is to prevent and detect the timely correction of errors and frauds. Effective and efficient operations, Accurate and reliable financial reporting, Compliance with applicable laws and regulations are not the primary objectives.

Hence option d is correct.

Which of the following audit procedures is most likely to be conducted only after year-end?

Some audit prcedures are done only at the end of the period , such as verifying whether the financial statements are agreeing according to the records, verifying the adjusting entries made in the course of preparation of financial statements.

Hence, "Evaluation of management’s adjusting journal entries to the financial statements"is correct