QUESTION 1 In order to perform a quality audit, the external auditor has to obtain sufficient appropriate evidence, via a structured process, on which to base the auditor's opinion. True O False QUESTION 2 The external auditor discovered that Puritan Corporation (Puritan) has had no issues with fraud in the last 10 years. Despite Puritan's favorable record on fraud, the external auditor continues to assess fraud risk at Puritan as part of the audit procedures. The fraud risk assessment is considered a relevant process by the external auditor. O True O False QUESTION 3 Auditing is the process of guaranteeing the accuracy of the financial statements. O True O False QUESTION 4 External auditors rely extensively on the work of internal auditors during the execution of financial statement audits. O True O False QUESTION 5 The external auditor provides some level of advice to the company management as they prepare the financial statements. O True O False QUESTION 6 The incentive to commit fraud as well as the opportunity to commit fraud are the most critical elements of the fraud triangle. True O FalseQUESTION 7 The external auditor is accountable for preventing fraud in the financial statements. O True O False QUESTION 8 The Chief Financial Officer approved a $20,000 student loan reimbursement for one of her employees instead of the $10,000 reimbursement limit required by the organization. This is an example of asset misappropriation. O True O False QUESTION 9 Most users of financial statements have detailed knowledge of the operations of businesses and as a result do not need the opinion of external auditors in order to make informed decisions. O True O False QUESTION 10 The skills and personal qualities of external auditors is considered a factor in conducting a quality audit. O True FalseQUESTION 11 Influenced by bonus targets, the Head of Sales excluded significant sales return transactions from the financial statements. This is an example of fraudulent financial reporting. O True O False QUESTION 12 The previous external auditor of Samson and Co. (Samson) noted in the five years of auditing Samson that the company had a history of complying with investment laws. The assessment by the previous company is an indicator of a fraud risk factor. O True O False QUESTION 13 The users of financial statements rely on the opinion of external auditors as external auditors provide guarantees that the financial statements are free from material misstatements. True O False QUESTION 14 External auditors provide complete assurance that the financial statements are free of material misstatements. O True O False QUESTION 15 The external auditor is not required to approach the entire audit process with professional skepticism. O True O False QUESTION 16 Fraud detection procedures are usually not an integral part of the overall audit process. O True O False
