Auditing: A Risk Based-Approach to Conducting a Quality Audit
10th Edition
ISBN: 9781305080577
Author: Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher: South-Western College Pub
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Chapter 4, Problem 5TFQ
To determine
Concept introduction:
Breach of contract:
Breach of contract is a legal term used in the contract law. Breach of contract refers to the situation when any party of the contract fails to fulfill his part of the obligation as decided in the contract.
To identify: Whether the given statement is true or false.
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Students have asked these similar questions
Incompatible duties exist when an employee is in a position tlo penetrate and conceal errors of fraud.
True or False
Define and explain the differences among several kinds of employee frauds that might occur at an audit client.
The auditor’s primary consideration is whether, and how, internal control prevents, or detects and corrects:
illegal actions of the Management
None of these options
Material misstatement of the entity’s financial statements
Incentives that prompt an employee to behave improperly
Chapter 4 Solutions
Auditing: A Risk Based-Approach to Conducting a Quality Audit
Ch. 4 - Prob. 1TFQCh. 4 - Prob. 2TFQCh. 4 - Prob. 3TFQCh. 4 - Prob. 4TFQCh. 4 - Prob. 5TFQCh. 4 - Prob. 6TFQCh. 4 - Prob. 7TFQCh. 4 - Prob. 8TFQCh. 4 - Utilitarian theory holds that what is ethical is...Ch. 4 - Prob. 10TFQ
Ch. 4 - Prob. 11TFQCh. 4 - Prob. 12TFQCh. 4 - Prob. 13MCQCh. 4 - Prob. 14MCQCh. 4 - Prob. 15MCQCh. 4 - Prob. 16MCQCh. 4 - Prob. 17MCQCh. 4 - Prob. 18MCQCh. 4 - Prob. 19MCQCh. 4 - Prob. 20MCQCh. 4 - Prob. 21MCQCh. 4 - Prob. 22MCQCh. 4 - Prob. 23MCQCh. 4 - Prob. 24MCQCh. 4 - Prob. 25RSCQCh. 4 - Prob. 26RSCQCh. 4 - Prob. 27RSCQCh. 4 - Prob. 28RSCQCh. 4 - Prob. 29RSCQCh. 4 - Prob. 30RSCQCh. 4 - Refer to the Focus on Fraud feature “Moss Adams...Ch. 4 - Prob. 32RSCQCh. 4 - Prob. 33RSCQCh. 4 - Prob. 34RSCQCh. 4 - Prob. 35RSCQCh. 4 - Prob. 36RSCQCh. 4 - Prob. 37RSCQCh. 4 - Prob. 38RSCQCh. 4 - Prob. 39RSCQCh. 4 - Prob. 40RSCQCh. 4 - Prob. 41RSCQCh. 4 - Prob. 42RSCQCh. 4 - Prob. 43RSCQCh. 4 - Prob. 44RSCQCh. 4 - Prob. 45RSCQCh. 4 - Prob. 46RSCQCh. 4 - Prob. 47RSCQCh. 4 - Prob. 48RSCQCh. 4 - Prob. 49RSCQCh. 4 - Prob. 50RSCQCh. 4 - Prob. 51RSCQCh. 4 - Refer to Exhibit 4.4. Briefly explain the seven...Ch. 4 - Prob. 53RSCQCh. 4 - Prob. 54RSCQCh. 4 - Prob. 55RSCQCh. 4 - Prob. 56RSCQCh. 4 - Prob. 57RSCQCh. 4 - Prob. 58RSCQCh. 4 - Prob. 59RSCQCh. 4 - Prob. 60RSCQCh. 4 - Prob. 61RSCQCh. 4 - Prob. 62RSCQCh. 4 - Prob. 63RSCQCh. 4 - Prob. 64RSCQCh. 4 - KPMG (LO 1, 2, 3) KPMG LLP served as the external...Ch. 4 - Prob. 66FF
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- Why do auditors need to differentiate between employee and management fraud? Is it the responsibility of auditors to discover fraud?arrow_forwardIn a fraud examination, original documents must be protected from damage and tampering toa. Establish motive.b. Develop documentation for employee dismissal.c. Protect the chain of custody.d. Ensure that suspects are unaware of an investigation in progressarrow_forwardCulpa aquiliana as distinguished from culpa contractual: Proof of due diligence in the selection and supervision of employees is not considered a defense. Proof of the contract and its breach is sufficient to warrant recovery. The negligence of the defendant is only an incident in the performance of the obligation. The source of liability is the negligent act of the person causing damage to another.arrow_forward
- When an employee is in a position to penetrate and hide fraud, incompatible roles exist. False or Truearrow_forwardWhich of the following statements reflects an auditor’s responsibility for detectingfraud?(1) An auditor is responsible for detecting employee errors and simple fraud, butnot for discovering fraudulent acts involving employee collusion or managementoverride.(2) An auditor should plan the audit to detect fraud caused by departures from GAAP.(3) An auditor is not responsible for detecting fraud unless the application of auditingstandards would result in such detection.(4) An auditor should design the audit to provide reasonable assurance of detectingerrors and fraud that are material to the financial statements.arrow_forwardAuditors must consider the possibility of fraud by employees or management on every audit engagement. They must also consider the possibility that the client has not complied with laws. (a) Distinguish between employee and management fraud. (b) Describe the auditors' responsibility for the detection of fraud in an audit. (c) Describe the auditors' responsibility regarding noncompliance with laws by a client.arrow_forward
- The auditor’s primary consideration is whether, and how, internal control prevents, or detects and corrects: Material misstatement of the entity’s financial statements Financial statement fraud Incentives that prompt an employee to behave improperly illegal actions of the Managementarrow_forwardIf either party fails to perform their contractual obligations according to the contract terms, it will usually result in a breach of contract. The scope and nature of an auditor's contractual obligation to a client ordinarily is established in the: Select one: a. Corporations Act 2001. b. Management letter. c. Client’s constitution. d. Engagement letter.arrow_forwardWhen comparing the auditor's responsibility for detecting employee fraud and for detecting errors, the profession has placed the responsibility Select one: a. on the senior auditor for detecting errors and on the manager for detecting employee fraud b. more on discovering employee fraud than errors c. equally on discovering errors and employee fraud d. more on discovering errors than employee fraudarrow_forward
- Assume that an auditor makes an agreement with a client that theaudit fee will be contingent upon the number of days required to complete the engagement.Is this a violation of the Code of Professional Conduct? What is the essence of the rule ofprofessional ethics dealing with contingent fees, and what are the reasons for the rule?arrow_forwardA code of ethics is an important element of a fraud prevention program. Which of the following would diminish the effectiveness of a company’s code of conduct?a. The establishment of a chief ethics officer.b. The establishment of a hotline for reporting unethical behavior.c. The violation of the code of ethics by senior management.d. The posting of the code of ethics in the company workplace.arrow_forwardWhy is it important for auditors to consider the possibility of fraud by employees or management on every audit engagement? Why must they consider the possibility that the client has not complied with laws.arrow_forward
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