Acc 550 study questions - Study guides, Class notes & Summaries

Widely Held Perception of Accounting - ANSWER "Bean counting." Public perception is narrow. They perceive accting as a mechanical, black-or-white, right-or-wrong process. In reality, accting plays a critical role is supporting a prosperous society. This is represented by the pathways vision model. Says that economic activity goes into gray areas that lead to accting judgments (critical thinking) to provide useful info that leads to good decisions and a prosperous society. Good decisions h...

what is the most costly type of fraud - ANSWER financial reporting fraud Can fraud be eliminated? - ANSWER no how does one distinguish between error and fraud? - ANSWER Intent who is responsible for preventing and detecting fraud - ANSWER management and those charged with governance

How is Information Relevant to Auditing? - ANSWER The financial statements that are audited are comprised of information. The audit report is also info itself. Reduces info asymmetries and info risk. What does it mean to be an audit professional? - ANSWER To be ethical, inquisitive, and professionally skeptical. Expectations are to protect the public interest and be knowledgeable/competent.

Financial Reporting Fraud -theft (misappropriation of assets) - ANSWER Which is the most costly type of fraud? What is the most common type of fraud? -revenue recognition -improper disclosures -manipulation of expenses - ANSWER What fraud schemes are the most common (i.e. which accounts)?

What is the most costly type of fraud? - ANSWER Financial Reporting Fraud What is the distinguishing factor between fraud and error? - ANSWER "...whether the underlying action that results in the misstatement of the financial statements is intentional or unintentional" Are auditors responsible for the detection of fraud? - ANSWER "An auditor conducting an audit in accordance with ISA's is responsible for obtaining reasonable assurance that the financial statements taken as a whole are ...

although all the current members of an internal audit activity have good records of performance, the manager is not sure if any of the members are ready to assume a management role. which of the following is an advantage of bringing in an outsider rather than promoting from within? a. management training costs are reduced when a qualified outsider is hired b. the manager can be sure that the new position will be filled by a competent employee c. bringing in an outsider is a less expensive ...

planning the audit, how does materiality play a role? - ANSWER materiality is a matter of professional judgement, determine materiality for financial statements as a whole, provides basis for: nature and extent of risk assessment procedures, ID risks of material misstatement, determine procedures how to determine materiality - ANSWER start with a firm provided benchmark, adjust for qualitative concerns

Indications of noncompliance - ANSWER 1) Investigation by governmental agency 2) Violations cited by regulators 3) Unusually large payments made in cash 4) Unexplained payments of gov't officials 5) Improperly recorded transactions 6) Purchasing prices significantly above/below market 7) Adverse media comment 8) Payments to registered tax havens What steps should an auditor take when noncompliance is identified or suspected? - ANSWER 1) Obtain understanding of the nature of the act and...

the omission or misstatement of an item in a financial report is material if, in the light of surrounding circumstances, the magnitude of the item is such that it is probable that the judgment of a reasonable person relying upon the report would have be been changed or influenced by the inclusion or correction of the item - ANSWER What is materiality? a substantial likelihood that the disclosure of the omitted fact would have been viewed by the reasonable investor as having significantly al...

which of the following audit committee activities is of the greatest benefit to internal audit activity? a. review and endorsement of all internal auditing engagement communications prior to their release b. assurance that the external auditor will rely on the work of the internal audit activity whenever possible c. review and approval of engagement work programs d. determine whether scope limitations impede the ability of the internal audit activity to execute its responsibilities - ANS...