1) The auditor uses the Audit Risk Model to compute Detection Risk (DR). The lower the DR of an account

a. The fewer the substantive audit resources (time spent, experience level of the audit personnel, size of samples, etc.) that need to be dedicated to auditing that account

b. The greater the substantive audit resources that need to be dedicated to auditing that account

c. It makes no difference so far as the substantive audit resources that need to be dedicated to auditing that account

2) Premature revenue recognition can be done by: a. Improper cutoff. b. Channel stuffing. c. Both a) and b) are methods of premature revenue recognition d. Neither a) nor b) are methods of premature revenue recognition.

3)What is the main purpose of the brainstorming session?

a. To determine materiality

b. To determine if analytical procedures should be applied to the revenue account.

c. To speculate how a material misstatement of the financial statements could occur.

d. To determine if the procedures in the audit program will satisfy the audit objectives.

4) Which of the following characteristics most likely would heighten an auditors concern about the risk of intentional manipulation of financial statements?

a. Turnover of senior accounting personnel is low.

b. Insiders recently purchased additional shares of the companys stock.

c. Management places excessive emphasis on meeting earnings goals.

d. The rate of change in the companys industry is slow.

5) The auditing standards require auditors to ask certain questions of management regarding fraud. Which of the following questions must be asked?

a. Whether management has ever intentionally violated the securities laws.

b. Whether management has any knowledge of fraud within the company.

c. Managements attitude toward regulatory authorities.

d. Managements attitude about hiring ethical employees.