Auditing: A Risk Based-Approach to Conducting a Quality Audit
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 2, Problem 15MCQ
To determine

Introduction:Opportunity is referred as situations that increases the opportunity for a perpetrator to commit fraud and reduces the risk of getting caught. Weakness in internal controls and complex transactions are the basic factors which increases the opportunity to commit fraud.

To identify:The option that represent an opportunity to commit fraud.

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Which of the following is not a purpose of internal controls?     Guarantee profits     Protect assets     Adherence to company policies     Make fraud more difficult     Accurate accounting records
Explain the three special characteristics of management fraud: a. The fraud is perpetrated at levels of management above the one to which internal control structures generally relate. b. The fraud frequently involves using the financial statements to create an illusion that an entity is healthier and more prosperous than, in fact, it is. c. If the fraud involves misappropriation of assets, it frequently is shrouded in a maze of complex business transactions, often involving related third parties.   Please provide me a correct and clear explanations. Thank you!
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