AUDITING ACCTG 410-01-FALL SEMESTER 2019

Chapter 6 Homework

True or False

1.Independent auditors of financial statements and fraud examiners approach their work differently.

2.It is always good control to have the bookkeeper make a list of cash receipts and then have the bookkeeper record it immediately in the accounts.

3.Fidelity bonds are used to prevent embezzlement.

4.The use of confirmations for cash balances is still considered a generally accepted audit procedure.

5.It is not necessary to send confirmations on accounts that a company represents as closed during the year to get the bank to confirm zero balances.

6.The client should request the bank to send a cutoff bank statement directly to the auditor.

7.Fraud consists of unintentional misstatements or omissions in financial statements.

8.Fraud examiners are more interested in evaluating internal control weaknesses rather than strengths.

9.Psychotic motivation is characterized by the habitual criminal who steals for the sake of stealing.

10.Control systems enhance trust and reduce the bureaucracy of business.

11.The most effective long-run prevention of fraud lies in the practice of tight management controls over people.

12.Many observers would say that one key to integrity in business is "accountability."

13.Employee fraud almost always involves people at the top executive level.

14.An organization can prevent all fraud if its auditors are acquainted with some detection techniques.

15.The chain of custody is the crucial link of evidence to the fraud suspect.

16.Fraud awareness auditing includes "thinking like a crook" to imagine ways and means of stealing.

17.Employee fraud is an intentional act that injures investors or creditors through materially misleading financial statements.

18.The company's bank reconciliation is a critical means by which an auditor completes audit procedures over the cash balance in the financial statements.

19.One of the main requirements under GAAS relating to fraud in a financial statement audit is that auditors obtain evidence about the intent of the persons responsible for the fraud.