Reference no: EM132712598

Problem 1: Which of the following would the auditor be most concerned about regarding a heightened risk of intentional misstatement?

a. Senior management emphasizes that it is very important to beat analyst estimates of earnings every reporting period.

b. Senior management emphasizes that budgeted amounts for expenses are to be achieves for each reporting period or explained in the variance analysis report.

c. Senior management emphasizes that job rotation is a worthwhile corporate objective.

d. Senior management emphasizes that job evaluations are based on performance.

Problem 2: When assessing fraud risk,

a. Fraud risk is assessed only at the overall financial statement level.

b. The auditor's assessment of fraud risk should be ongoing throughout the audit.

c. If the auditor concludes that there is a risk of material misstatements due to fraud, auditing standards require that the risks be treated as pervasive.

d. Auditing standards require that the auditor presume there is a risk of fraud on the inventory account.

Problem 3: S1 Encryption is not appropriate in preventing interception by unauthorized users of data in transit.

S2 When auditors do not rely on detailed knowledge of the application's internal logic, they are performing white-box test of program controls.

S3 Variable sampling is the approach used by most IT auditors as it involves testing internal controls around processes deemed critical during audit planning.

a. False, true, false        b. True, true, true

c. False, false, false        d. True, false, false

Problem 4: The major disadvantage of an empty shell solution (cold site) as a second site backup is

a. The host site may be unwilling to disrupt its processing needs to process the critical applications of the disaster stricken company.

b. Intense competition for shell resources during a widespread disaster.

c. Maintenance of excess hardware capacity.

d. The control of the shell site is an administrative drain of the company.