Define fraud and explain the two types of misstatements thatare relevant to auditors’ consideration of fraud.

What are the objectives of audit risk assessment, and why is it important in assessing the likelihood that fraud may occur? Explain why risk assessment performed during audit planning sets the tone for the entire audit engagement.

What is the ethical value of applying the Fraud Triangle to assess the risk of material misstatements in the financial statements?

How do the professional audit standards differ for (a) errors, (b) frauds, (c) direct-effect noncompliance, and (d) indirect-effect noncompliance?

What role does the rationalization phase play in the process of financial statement fraud? A) Concealing fraudulent activities B) Initiating the fraudulent process C) Justifying unethical actions D) Exploiting weaknesses in controls

Auditing standards require that the engagement team members engage in discussion about the susceptibility of the financial statements to the risk of fraud. How does this discussion relate to the required discussion about the risk of material misstatement?

The following questions concern the auditor’s responses to thepossibility of fraud.a. When fraud risk factors are identified during an audit the auditor’s documentationshould includeThe Risk The Auditor’s Response toFactors Identified The Risk Factors Identified(1) Yes Yes(2) Yes No(3) No Yes(4) No No

What is the auditor's responsibility for detecting theft or fraud?

Fraud experts often say that there are three principal factors that contribute to fraud. Identify and explain each of these factors.

What do auditors consider when determining the extent to which the internal auditors’ work will affect the auditors’ procedures?     A. The materiality of the account balance or transaction, the risk of material misstatement of the assertions, and the amount of subjectivity involved in evaluating the evidence gathered.   B. Only the risk of material misstatement of the assertions related to the account balance, transaction, or disclosure and the amount of subjectivity involved in evaluating evidence gathered.   C. Only the amount of subjectivity involved in evaluating the evidence gathered.   D. Only the materiality of the account balance or transaction and the risk of material misstatement of the assertions.