1.An auditor is required to communicate with those charged with governance about all of the following matters, except for a. Opportunities to improve the entitys business processes to be more profitable b. Material adjusting journal entries proposed by the audit c. Disagreements the auditor had with management over accounting issues d. Instances where management requested a second opinion from another CPA firm. e. Fraud that is not material but which involves senior management.

2. Which of the following circumstances would be most indicative of a higher likelihood of fraudulent financial reporting? a. The clerk who is responsible for handling cash receipts is not subject to appropriate oversight by management. b. The entitys controller feels underpaid and underappreciated. c. There is inadequate internal control to safeguard the entitys assets. d. The payroll clerk appears to be living beyond his means and recently bought an expensive new home. e. The entity has been experiencing negative cash flows from its operating activities