ACCT562 2022 April Week 8 Quiz Latest

ACCT562 Auditing - An Operational and Internal Perspective Including Fraud Examination

Week 8 Quiz  

Question 1(TCO A) The Three E's of operational auditing do not include:

  Efficiency

  Effectiveness

  Efficacy

  Economy

Question 2(TCO A) Successful operational auditors possess all the following attributes except:

  Communication skills

  Subject matter expertise in systems

  Ability to spot trouble areas

  Chase elephants, not mice

Question 3(TCO B) Budgeted to actual performance data can be utilized to identify:

  Financial fraud

  Control weaknesses

  Areas for further investigation

  Management effectiveness

Question 4(TCO C) Management, process owners, and key stakeholders should all be _____ in the work program.

  observed

  identified

  interviewed

  weighted by risk factors

Question 5(TCO C) The work program should include interviews with:

  External auditor

  Large shareholders

  Board members

  None of the above

Question 6(TCO A-D) Reviewing high level processes, interviewing, and understanding the business is part of the _____ phase.

  reporting

  survey

  work program

  planning

Question 7(TCO D) The review team should be aware of various management and operational techniques, which includes all of the following except:

  Visioneering

  Participative Management

  Learning Organizations

  Benchmarking

Question 8(TCO E) Why operations have become inefficient is reflected in the _____ of the finding.

  criteria

  cause

  statement of condition

  effect

Question 9(TCO E) One of the functions of the operational review report is to

  None of the above

  identify responsible management.

  persuade and call to action.

  benchmark performance.

Question 10(TCO F) In one of the case studies in the textbook (page 190), Cy Chesterly was the vice president in charge of sales for one of the largest machine parts manufacturers in the Midwest. He was an excellent salesman and helped build the company into one of the most successful companies in the industry. While Chesterly was known to go overboard on the entertainment expenses, he really went wild when it came to buying personal items such as vacations, furniture, and jewelry to name a few. He was caught, however, and his lifestyle came to a halt. What was the most likely reason that the company didn’t have Chesterly prosecuted?

  Some of the company’s customers were believed to have been involved in Chesterly‘s schemes.

  He agreed to mortgage his home to repay the money.

  Chesterly was well liked by everyone and, with new management coming in; the company thought it would have a negative impact on morale.

  Chesterly’s wife became seriously ill and company felt it would have been too much of a blow to her recovery if he were in prison.

Question 11(TCO F) The textbook lists several ways to reduce the pressures to commit financial statement fraud, including:

  Maintaining accurate personnel records including background checks on new employees.

  Having confidential reporting mechanisms to communicate inappropriate behavior

  Maintaining accurate and complete internal accounting records.

  Avoiding setting unachievable financial goals.

Question 12(TCO F) Which of the following choices is not an action that will increase the perception of detection within an organization?

  Developing employee anti-fraud education programs

  Random e-mails that fraud is being investigated

  Establishing a reporting program

  Increasing the use of analytical reviews

Question 13(TCO F) Daniel Isley works as an internal auditor for Atlantic Insurance Co. While reviewing the company’s travel and entertainment expenses, Isley noticed that one employee had submitted several receipts from Chase’s Restaurant for round-dollar amounts just under the company’s reimbursement limit. Further, the receipts were consecutively numbered, but were submitted over a six-month period. What type of scheme did Isley most likely uncover?

  Fictitious expense reimbursement

  Multiple reimbursements

  None of the above

  Mischaracterized reimbursement

Question 14(TCO F) In most cases, which of the following parties should be primarily responsible for directing a fraud examination?

  The external auditors

  The human resources manager

  The head of the security department

  The company’s legal counsel

Question 15(TCO F) In one of the case studies in the textbook (page 239), the General Services Administration (GSA), the federal government’s bookkeeping agency, purchased more than $200 million worth of defective and useless furniture from a New Jersey furniture manufacturer. After reviewing the books of the furniture manufacturer, it was clear that the company was paying off GSA inspectors. How did the investigation get started?

  An audit conducted by the GSA found a high rate of return of modular furniture during a six-month period.

  A Senator had his desk collapse when he threw his sub-committee’s budget on his desk after a hearing.

 

  A series of articles in a Washington D.C. newspaper led to a congressional investigation.

  A whistleblower called the GSA’s hotline to report that inspectors in New Jersey were receiving bribes for certifying the furniture.

Question 16(CO A) Consider the examples below. Please identify which of the three "E's" each example represents. Discuss how the evaluation of the three "E's" fits into the specific objectives of the operational audit.

Griggs Corporation has achieved the established goals for the new product line. The new product line's revenue increased by 10 percent.

At ABC Company, upper management has recently authorized and actively purchased zero coupon bonds. The investment accounting software used by general accounting is not capable of recording zero coupon bonds. As a result, zero coupon bonds are being recorded manually.

New government regulations have a negative impact on forecasted sales.

The Superway grocery store is open 24 hours. During the overnight shift, the manager schedules one cashier.

The quick-mart has just implemented just-in-time inventory purchasing agreements.

Question 17(TCO B) One of the most important areas of the planning phase is to identify the critical problem areas. Name and explain these five areas, and then recommend the sources you might use in the review of administrative and operational controls.

Question 18(TCO C) There are four procedural steps in the work program development. Identify these procedural steps and their purpose, and then decide which work steps might help the reviewer meet the objective in a purchase requisition procedure, as outlined in your notes.

 Question 19(TCO D) Describe four factors that a reviewer must consider in reaching conclusions during the field work phase. Explain why a reviewer should consider these factors. Then identify four specific field work techniques used to identify weaknesses in management and operational systems.

Question 20(TCO E) Criteria is one of the attributes of review findings. Identify no less than four of the six criteria standards and analyze their inclusion in your report. Then discuss the six steps to developing a finding, including the purpose of each step.

Question 21(TCO F) What is cash larceny? Briefly describe some of the common types of cash larceny schemes. What are some of the internal control procedures to deter and detect cash larceny schemes?