Auditing · Topic 13

Fraud, Error, and Auditor Responsibility Quiz

Work through 25 multiple-choice questions, one at a time. Submit each answer for feedback. At the end, review your score and see which concepts to revisit.

Review the Q&AAuditing quiz learning path
1. A clerk accidentally posts one supplier invoice twice. Which auditing concept best fits this case?
2. A manager deliberately books fictitious year-end sales to hit a bonus target. Which auditing concept best fits this case?
3. Employees hide missing cash by altering ledgers. Which auditing concept best fits this case?
4. Senior management can bypass normal approvals to post unusual period-end adjustments. Which auditing concept best fits this case?
5. Directors ask the external auditor to take primary responsibility for preventing fraud. Which auditing concept best fits this case?
6. A clerk accidentally posts one supplier invoice twice. What is the most appropriate response?
7. A manager deliberately books fictitious year-end sales to hit a bonus target. What is the most appropriate response?
8. Employees hide missing cash by altering ledgers. What is the most appropriate response?
9. Senior management can bypass normal approvals to post unusual period-end adjustments. What is the most appropriate response?
10. Directors ask the external auditor to take primary responsibility for preventing fraud. What is the most appropriate response?
11. A clerk accidentally posts one supplier invoice twice. Which evidence would be most directly useful?
12. A manager deliberately books fictitious year-end sales to hit a bonus target. Which evidence would be most directly useful?
13. Employees hide missing cash by altering ledgers. Which evidence would be most directly useful?
14. Senior management can bypass normal approvals to post unusual period-end adjustments. Which evidence would be most directly useful?
15. Directors ask the external auditor to take primary responsibility for preventing fraud. Which evidence would be most directly useful?
16. A clerk accidentally posts one supplier invoice twice. Which conclusion is best supported by the case?
17. A manager deliberately books fictitious year-end sales to hit a bonus target. Which conclusion is best supported by the case?
18. Employees hide missing cash by altering ledgers. Which conclusion is best supported by the case?
19. Senior management can bypass normal approvals to post unusual period-end adjustments. Which conclusion is best supported by the case?
20. Directors ask the external auditor to take primary responsibility for preventing fraud. Which conclusion is best supported by the case?
21. A clerk accidentally posts one supplier invoice twice. Which shortcut would most directly undermine the work in this case?
22. A manager deliberately books fictitious year-end sales to hit a bonus target. Which shortcut would most directly undermine the work in this case?
23. Employees hide missing cash by altering ledgers. Which shortcut would most directly undermine the work in this case?
24. Senior management can bypass normal approvals to post unusual period-end adjustments. Which shortcut would most directly undermine the work in this case?
25. Directors ask the external auditor to take primary responsibility for preventing fraud. Which shortcut would most directly undermine the work in this case?
Show the answer key
  1. Error An accidental duplicate is an unintentional misstatement.
  2. Fraudulent financial reporting Intentional manipulation of reported revenue is financial reporting fraud.
  3. Misappropriation of assets Theft concealed in records can create a financial statement misstatement.
  4. Management override Override can exist even when routine approvals normally work.
  5. Governance and management responsibility Prevention and detection are primarily management and governance responsibilities.
  6. Check the cause and investigate whether similar duplicate postings exist An accidental duplicate is an unintentional misstatement.
  7. Respond to the suspected fraud risk with targeted revenue and journal-entry work Intentional manipulation of reported revenue is financial reporting fraud.
  8. Investigate discrepancies and obtain independent evidence over cash movements Theft concealed in records can create a financial statement misstatement.
  9. Test selected journal entries and evaluate estimates and unusual transactions for indicators of fraud Override can exist even when routine approvals normally work.
  10. Explain who owns prevention and detection and what reasonable assurance the audit provides Prevention and detection are primarily management and governance responsibilities.
  11. Invoice references, transaction history and correction records Check the cause and investigate whether similar duplicate postings exist.
  12. Customer confirmations, dispatch records and unusual manual journals Respond to the suspected fraud risk with targeted revenue and journal-entry work.
  13. Bank records, reconciliation differences and system access history Investigate discrepancies and obtain independent evidence over cash movements.
  14. Journal metadata, supporting documentation and estimate histories Test selected journal entries and evaluate estimates and unusual transactions for indicators of fraud.
  15. Governance responsibilities and applicable engagement terms Explain who owns prevention and detection and what reasonable assurance the audit provides.
  16. An accidental duplicate is an unintentional misstatement Invoice references, transaction history and correction records would support this assessment.
  17. Intentional manipulation of reported revenue is financial reporting fraud Customer confirmations, dispatch records and unusual manual journals would support this assessment.
  18. Theft concealed in records can create a financial statement misstatement Bank records, reconciliation differences and system access history would support this assessment.
  19. Override can exist even when routine approvals normally work Journal metadata, supporting documentation and estimate histories would support this assessment.
  20. Prevention and detection are primarily management and governance responsibilities Governance responsibilities and applicable engagement terms would support this assessment.
  21. Calling any duplicate entry deliberate fraud without evidence of intent An accidental duplicate is an unintentional misstatement.
  22. Treating a management explanation as conclusive evidence that the sales occurred Intentional manipulation of reported revenue is financial reporting fraud.
  23. Relying entirely on the altered ledger to rule out cash theft Theft concealed in records can create a financial statement misstatement.
  24. Assuming effective routine controls eliminate override risk Override can exist even when routine approvals normally work.
  25. Promising that the external audit guarantees prevention of fraud Prevention and detection are primarily management and governance responsibilities.

These cases use general auditing principles. Apply the relevant local law and professional standards when evaluating a real engagement. Reference: IAASB standards and pronouncements.