1. What is meant by the control environment?
2. What are the factors the auditor must evaluate to understand the control environment?
3. What is the relationship among the five components of internal control?
4. For each of the following, give an example of a physical control the client can use to protect the asset or record
5. Petty cash
6. Cash received by retail clerks
7. Accounts receivable records
8. Raw materials inventory
9. Perishable tools
10. Manufacturing Equipment
11. Marketable securities
12. Distinguish between the terms errors and fraud
13. Distinguish between the fraudulent financial reporting and misappropriation od assets. Discuss the likely difference between these two types of fraud on the fair presentation of financial statements.
14. Define fraud and explain the two types of misstatements that are relevant to auditor's consideration of fraud.
15. What are the most common approaches that perpetrators use to commit fraudulent financial reporting?
16. The fraud triangle identifies incentives, opportunities, and rationalizations as the three elements associated with most frauds. Describe how each elements is necessary for fraud to occur.
17. If one of the three elements of fraud is not present, can fraud still be perpetrated? Explain.
18. Identify the factors (red flag) that would be strong indicators of opportunities to commit fraud.
19. Is the ability to rationalize the fraud an important aspect to consider when analyzing a potentially fraudulent situation? What are some of the common rationalizations used by fraud perpetrators?
20. Define what is meant by a control and weakness in internal control. Give two examples of each in the sales and collection cycle.
21. List at least five common fraud schemes in the acquisition and payment cycle
22. List at least three common controls for petty cash
23. Identify the fraud risk associated with debt obligations
24. Identify the fraud risks associated with stockholders' equity accounts.