Question 12

A formal discussion among the audit engagement team members about the possibility of fraud, including a fraud risk assessment is known as:

a. Audit planning.

b. Brainstorming.

c. Continuing education.

d. Staff training.

Question 13

A control designed to prevent the occurrence of a misstatement is referred to as:

a. A detective control.

b. A mitigating control.

c. A processing control.

d. A preventative control.

Question 14

A control designed to discover errors that occur during processing is referred to as:

a. A detective control.

b. A mitigating control.

c. A processing control.

d. A preventative control.

Question 15

A special line of communication for anonymous or confidential communication, particularly when an employee is concerned that something is inappropriate in the organizations operations is known as the:

a. Ethics Policy

b. Hotline

c. Whistle-blower function

d. Operating manual.

Question 16

Management (and/or the auditor) will likely ____________, following a transaction from origination to when it is reflected in the financial records, to determine if the internal controls are effectively designed and have been implemented.

a. Engage a specialist for

b. Conduct a walkthrough

c. Prepare a flowchart

d. Perform research

Question 17

A deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the organizations annual or interim financial statements will not be prevented or detected on a timely basis.

a. A control deficiency.

b. A significant deficiency

c. A catastrophic deficiency

d. A material weakness