Provide brief explanation on your choice for MCQ 1-5. 1) When auditing with "fraud awareness," auditors should especially notice and follow up employee activities under which of these conditions? A. The company always estimates the inventory but never takes a complete physical count. B. The petty cash box is always locked in the desk of the custodian. C. Managementhaspublishedacompanycodeofethicsandsendsfrequentcommunication newsletters about it. D. The board of directors reviews and approves all investment transactions. 2)The best way to enact a broad fraud prevention program is to: A. Install airtight control systems of checks and supervision. B. Name an "ethics officer" who is responsible for receiving and acting on fraud tips. C. Place dedicated hotline telephones on walls around the workplace with direct communication to the company ethics officer D. Practice management of the people and for the people to help them share personal and professional problems. 3) Which of these arrangements of duties could most likely lead to an embezzlement or theft? A. The inventory warehouse manager has responsibility for making the physical inventory observation and reconciling discrepancies to the perpetual inventory records. B. The cashier prepared the bank deposit, endorsed the checks with a company stamp, and delivered the cash and checks to the bank for deposit (no other bookkeeping duties) C. The accounts receivable clerk received a list of payments received by the cashier so he could make entries in the customers' accounts receivable subsidiary accounts D. The financial vice president received checks made out to suppliers and the supporting invoices, signed the checks, and mailed the checks. - analytical procedures concerning C LICENS. 4) In preparing for the audit of cash, the auditors perform analytical procedures concerning cash balances. Which of the following would be the best source of information for use in the estimate of cash? A. Prior-years' balances. B. Management inquiry. C. Cash budgets. D. Aged accounts receivable reports. 5) If the auditor believes that a misstatement is or might be intentional and the effect on the financial statements could be material or cannot be readily determined, the auditor should do which of the following? A. Inquire of management as to the possibility of fraud. B. Discuss with the audit committee what should be done to prevent possible future misstatements. C. Perform procedures to obtain additional audit evidence to determine whether fraud has occurred or is likely to have occurred. D. Both a and b are correct. E. None of these is correct