Reference no: EM132781275

Problem 1: The possibility that fraud has resulted in intentional misstatement in the financial statements is known as

A. fraud risk.

B. control risk.

C. detection risk.

D. acceptable audit risk.

Problem 2: Three conditions for fraud are referred to as the? "fraud triangle." One of the sides of this triangle is incentives or pressures. The other two sides are

A. opportunities and a desire to meet debt repayment obligations.

B. attitudes or rationalizations and the need to maintain stock prices.

C. the need to maintain stock prices and the need to meet debt repayment obligations.

D. opportunities and attitudes or rationalizations.

Problem 3: Fraud risk factors are examples of factors that increase the risk of fraud. Which of the following is an example of a management? "incentives or? pressures" risk? factor?

A. There is only one board member who understands financial statements and she has suffered a heart attack.

B. There has been significant turnover in the accounting department in the last year.

C. Customer demand for a new product line was significantly less than expected.

D. Management and the auditors disagree on how to value a large contract in progress.

Problem 4: Which of the following is a factor that relates to? "attitudes or? rationalization" to commit fraudulent financial? reporting?

A. significant accounting estimates involving subjective judgments

B. high turnover of? accounting, internal? audit, and information technology staff

C. ?management's practice of making overly aggressive forecasts

D. excessive pressure for management to meet debt repayment requirements