15. Consider the tollowing atatementa T. Mateziality has both quantitative and qualitative conaiderationa "incentive" "opportunity" Eraud triangle involves and "rationalization a. I is true: II ia true. b. I ia true: II is false. c.Iia fals II is true d. I is falae: II ia falae Anawer 16. Which of the following terms is associated with the auditing standard stating: In rare circumstances, the auditor may judge it necessary to depart from a relevant presumptively mandatory requirement. In such circumstances, the auditor should perform alternative procedures to achieve the intent of the requirement. AU-C200.26 a. Can b. May C. Must d. Should Answer 1 Management of Premium Discovery Company is compensated through large salaries, stock options and bonuses tied to the company's working capital growth. The CEO is constantly holding meetings to ensure that management is on target for increased operating income each month. Based on the above information only, what type of probable motivation is there to commit fraud at the company? a. Incentive. b. Opportunity. c. Rationalization. d. Expectation 12 8 Which of the following best describes the amount of misstatement an auditor is willing to accept and still not say the account balance is materially misstated? a. Tolerable misstatement. b. Performance materiality c. A clearly trivial amount d. Significant materiality ausw- I q . If the auditor's assignment of audit risk is low (ie. 1% rather than 5%, what is the effect on the amount of direct testing (i.e. audit work) performed by the auditor? a. Increase. b. Decrease. c. No change