Question<\/p>\n
1. Question :<\/p>\n
(TCO 4) If a CPA firm is being sued for common law fraud by a third party based on materially false financial statements, which of the following is the best defense the accountants could assert?<\/p>\n
A disclaimer contained in the engagement letter<\/p>\n
Lack of privity<\/p>\n
Non-negligent performance<\/p>\n
Contributory negligence on the part of the client<\/p>\n
Question 2. Question :<\/p>\n
(TCO 4) “Absence of reasonable care that can be expected of a person is a set of circumstances” defines<\/p>\n
pecuniary negligence.<\/p>\n
gross negligence.<\/p>\n
extreme negligence.<\/p>\n
ordinary negligence.<\/p>\n
Question 3. Question :<\/p>\n
(TCO 4) A third-party beneficiary is one that<\/p>\n
has failed to establish legal standing before the court.<\/p>\n
does not have privity of contract and is unknown to the contracting parties.<\/p>\n
does not have privity of contract, but is known to the contracting parties and intended to benefit under the contract.<\/p>\n
may establish legal standing before the court after a contract has been consummated.<\/p>\n
Question 4. Question :<\/p>\n
(TCO 4) Tort actions against CPAs are more common than breach of contract actions because<\/p>\n
there are more torts than contracts.<\/p>\n
the burden of proof is on the auditor rather than on the person suing.<\/p>\n
the person suing need prove only negligence.<\/p>\n
the amounts recoverable are normally larger.<\/p>\n
Question 5. Question :<\/p>\n
(TCO 4) If the auditor believes that the financial statements are not fairly stated or is unable to reach a conclusion because of insufficient evidence, the auditor<\/p>\n
should withdraw from the engagement.<\/p>\n
should request an increase in audit fees so that more resources can be used to conduct the audit.<\/p>\n
has the responsibility of notifying financial statement users through the auditor\u2019s report.<\/p>\n
should notify regulators of the circumstances.<\/p>\n
Question 6. Question :<\/p>\n
(TCO 3) Which of the following is not one of the reasons that auditors provide only reasonable assurance on the financial statements?<\/p>\n
The auditor commonly examines a sample, rather than the entire population of transactions.<\/p>\n
Accounting presentations contain complex estimates, which involve uncertainty.<\/p>\n
Fraudulently prepared financial statements are often difficult to detect.<\/p>\n
Auditors believe that reasonable assurance is sufficient in the vast majority of cases.<\/p>\n
Question 7. Question :<\/p>\n
(TCO 3) In the fraud triangle, fraudulent financial reporting and misappropriation of assets<\/p>\n
share little in common.<\/p>\n
share most of the same risk factors.<\/p>\n
share the same three conditions.<\/p>\n
share most of the same conditions.<\/p>\n
Question 8. Question :<\/p>\n
(TCO 3) Fraudulent financial reporting may be accomplished through the manipulation of<\/p>\n
assets.<\/p>\n
liabilities.<\/p>\n
revenues.<\/p>\n
all of the above.<\/p>\n
Question 9. Question :<\/p>\n
(TCO 3) Which of the following is a factor that relates to incentives to misappropriate assets?<\/p>\n
Significant accounting estimates involving subjective judgments<\/p>\n
Significant personal financial obligations<\/p>\n
Management’s practice of making overly aggressive forecasts<\/p>\n
High turnover of accounting, internal audit and information technology staff<\/p>\n
Question 10. Question :<\/p>\n
(TCO 3) Which of the following characteristics is most likely to heighten an auditor’s concern about the risk of material misstatements, due to fraud in an entity’s financial statements?<\/p>\n
Employees who handle cash receipts are not bonded.<\/p>\n
The entity’s industry is experiencing declining customer demand.<\/p>\n
Internal auditors have direct access to the board of directors and the entity’s management.<\/p>\n
The board of directors is active in overseeing the entity’s financial reporting policies.<\/p>\n","protected":false},"excerpt":{"rendered":"
Question 1. Question : (TCO 4) If a CPA firm is being sued for common law fraud by a third party based on materially false financial statements, which of the following is the best defense the accountants could assert? A Read More …<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-50148","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts\/50148","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/comments?post=50148"}],"version-history":[{"count":0,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts\/50148\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/media?parent=50148"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/categories?post=50148"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/tags?post=50148"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}