Auditing: A Risk Based-Approach (MindTap Course List)
11th Edition
ISBN: 9781337619455
Author: Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher: Cengage Learning
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Chapter 9, Problem 7RQSC
To determine
Introduction: Revenue recognition is an accounting principle which is generally accepted. It identifies the specific conditions through which revenue is recognized. At the time of critical situation, revenue is recognized.
The methods companies use to inflate revenue fraudulently and the auditors use professional skepticism to help identify the fraud
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Students have asked these similar questions
1. Distinguish between exposure and risk.
2. Explain the characteristics of management fraud.
3. Why are the computer ethics issues of privacy, security, and property ownership of interest to accountants?
4. Explain why collusion between employees and management in the commission of a fraud is difficult to both prevent and detect.
Please provide me a correct answer and PLEASE NO PLAGIARSIM. Thank you.
FRAUD-MOTIVATING FACTORSResearch has shown that situational pressures and opportunity are factors that contribute to fraudulent behavior.
Requireda. Identify two situational pressures in a public company that would increase the likelihood of fraud.b. Identify three opportune moments that would increase the likelihood of fraud.
ased on an assessment of audit risk, the auditors are concerned with the following two risks:
The risk that that the client might be making duplicate payments to vendors.
The risk that the client’s accounting clerk might be making unauthorized payments to himself.
Required:
a. Assuming that the client has a manual accounting system, describe how the auditors can design a test to identify the duplicate payments and unauthorized payments.
b. Assuming that the client has an IT accounting system, describe how the auditors might use data analytic software to design a test to identify the duplicate payments and the unauthorized payments.
b. Assuming that the client has an IT accounting system, describe how the auditors might use data analytic software to design a test to identify the duplicate payments and the unauthorized payments.
Chapter 9 Solutions
Auditing: A Risk Based-Approach (MindTap Course List)
Ch. 9 - In the revenue cycle, the most significant...Ch. 9 - Which of the following statements is true...Ch. 9 - Prob. 4CYBKCh. 9 - Prob. 7CYBKCh. 9 - Prob. 8CYBKCh. 9 - Prob. 9CYBKCh. 9 - Prob. 10CYBKCh. 9 - Prob. 11CYBKCh. 9 - Prob. 12CYBKCh. 9 - Prob. 13CYBK
Ch. 9 - Prob. 14CYBKCh. 9 - Prob. 15CYBKCh. 9 - Prob. 16CYBKCh. 9 - Prob. 17CYBKCh. 9 - Prob. 18CYBKCh. 9 - Which of the following statements is false...Ch. 9 - Prob. 20CYBKCh. 9 - Prob. 22CYBKCh. 9 - Prob. 23CYBKCh. 9 - Prob. 24CYBKCh. 9 - Prob. 25CYBKCh. 9 - Prob. 26CYBKCh. 9 - Prob. 27CYBKCh. 9 - Prob. 28CYBKCh. 9 - Prob. 29CYBKCh. 9 - Prob. 30CYBKCh. 9 - Prob. 31CYBKCh. 9 - Prob. 32CYBKCh. 9 - Refer to Exhibit 9.1. Which accounts are relevant...Ch. 9 - Prob. 2RQSCCh. 9 - Prob. 3RQSCCh. 9 - An important task ¡n the audit of the revenue...Ch. 9 - Prob. 5RQSCCh. 9 - Prob. 6RQSCCh. 9 - Prob. 7RQSCCh. 9 - Prob. 8RQSCCh. 9 - Prob. 9RQSCCh. 9 - Prob. 10RQSCCh. 9 - Prob. 11RQSCCh. 9 - Prob. 12RQSCCh. 9 - Prob. 13RQSCCh. 9 - Prob. 14RQSCCh. 9 - Prob. 15RQSCCh. 9 - Stainless Steel Specialties (SSS) is a...Ch. 9 - Prob. 17RQSCCh. 9 - Prob. 18RQSCCh. 9 - Prob. 19RQSCCh. 9 - Prob. 20RQSCCh. 9 - Prob. 21RQSCCh. 9 - Prob. 22RQSCCh. 9 - Prob. 23RQSCCh. 9 - Prob. 24RQSCCh. 9 - Prob. 25RQSCCh. 9 - Prob. 26RQSCCh. 9 - Prob. 27RQSCCh. 9 - Prob. 28RQSCCh. 9 - Prob. 29RQSCCh. 9 - Prob. 30RQSCCh. 9 - Prob. 31RQSCCh. 9 - Prob. 32RQSCCh. 9 - Prob. 33RQSCCh. 9 - Prob. 34RQSCCh. 9 - Prob. 35RQSCCh. 9 - Prob. 36RQSCCh. 9 - Prob. 37RQSCCh. 9 - Prob. 38RQSCCh. 9 - Prob. 39RQSCCh. 9 - Read the following scenario about Strang...Ch. 9 - Prob. 41RQSCCh. 9 - Prob. 42RQSCCh. 9 - ZYNGA (LO Z 3, 4, 5, 6, 8) Refer to the Why It...Ch. 9 - UTSTARCOM, INC. (LO 2, 3, 4, 5, 6, 8) UTStarcom is...Ch. 9 - Prob. 47FFCh. 9 - Prob. 48FFCh. 9 - Prob. 55DAUA
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Which of the following would a fraudster perceive as a pressure? A. lack of management oversight B. everyone does it C. living beyond ones means D. lack of an internal audit functionarrow_forward(This subject is about Accounting Information System.) 1. Because all fraud involves some form of financial misstatement, how is fraudulent statement fraud different? 2. Explain the problems associated with lack of auditor independence. 3. Why is an independent audit committee important to a company? 4. In this age of high technology and computer-based information systems, why are accountants concerned about physical (human) controls? Please provide me a correct answer and PLEASE NO PLAGIARISM. Thank you!!arrow_forwardWhat is the connection between criminology and the discovery or prevention of fraud? It's not the same as studying accounting or auditing, is it?arrow_forward
- If one of the three elements of the fraud triangle is not present, can fraud still be perpetrated? Explain. Identify factors (red flags) that would be strong indicators of opportunities to commit fraud. Is the ability to rationalize the fraud an important aspect to consider when analyzing a potentially fraudulent situation? What are some of the common rationalizations used by fraud perpetrators? Define and illustrate kiting. What controls should the client institute to prevent it?arrow_forward“The deliberate fraud committed by management that injures investors and creditors through materially misleading financial statements. The use of incentive systems and opportunities for fraudulent behavior are associated with higher fraud risk assessments by audit partners; however, the most important factors are senior management ethical attitudes and dishonest communication from management with the external auditor.” Required: Compare and contrast financial statement fraud with asset misappropriation. Why is it important to analyze the relationship between a company and its auditors?arrow_forwardThe following scenarios are taken from actual fraud cases. For each scenario, categorize as primarily indicating (A) An incentive to commit fraud (B) An opportunity to commit fraud or (C) a rationalization for committing fraud. State your reason for your answer in each scenario. 1. Top management of the company closely guards internal financial information, to the extent that even some employees on a "need to know basis" are denied full access.arrow_forward
- Based on an assessment of audit risk, the auditors are concerned with the following two risks: The risk that that the client might be making duplicate payments to vendors. The risk that the client’s accounting clerk might be making unauthorized payments to himself. Required: a. Assuming that the client has a manual accounting system, describe how the auditors can design a test to identify the duplicate payments and unauthorized payments. b. Assuming that the client has an IT accounting system, describe how the auditors might use data analytic software to design a test to identify the duplicate payments and the unauthorized payments. c. Describe the advantages of using data analytics software to identify unusual transactions or entries.arrow_forwardMachine learning is a technique and approach that is becoming increasingly prevalent in the world of auditing. Which of the following represents the best example of a scenario whereby machine learning could be used effectively? O A Chief Financial Officer wishes to ensure that all bad debt expense write offs are personally approved by him before being authorized. An auditor wishes to improve the response rate for accounts receivable positive confirmations. An auditor wishes to identify unauthorized revenue transactions in a client's general ledger. None of these answer choices are correct. Dan and Asher are discussing how a machine learning model might look one day after their auditing class. Dan mentions to Asher that in order for the model to be successful and accurate, which of the following would first have to happen? The firm installing the machine learning system and software would need to ensure that all scheduled updates are installed properly. O The auditor would need to…arrow_forwardWhy do fraud examiners handle information in a different manner than auditors? Why is thisimportant?arrow_forward
- Discuss the motives of why C-Suite executives would commit fraud and how understanding the motive for fraud can assist an auditor in the analysis of financial statements. Determine if government regulations such as SOX and PCAOB are effective in reducing unethical behavior of corporate executives, and if additional organizational controls could be applied to expose and reduce fraud committed by C-Suite executives.arrow_forwardDiscussion Topic: What is Fraud? Forensic accountants and fraud examiners provide support for accusations of fraud. To be effective, they must understand the difference between fraud and abuse, and must understand the legal concept of fraud, as well as elements of fraud. How does fraud differ from abuse? Give an example of each. What are the legal elements of fraud? (Hint: there are four!); explain each element.arrow_forwardManagement fraud (fraudulent financial reporting) is not the expected norm, but it happens from time to time. In the United States, several cases have been widely publicized. They happen when motives and opportunities overwhelm managerial integrity.a. What distinguishes management fraud from a defalcation?b. What are an auditor’s responsibilities under auditing standards to detect management fraud?c. What are some characteristics of management fraud that an audit team should consider to fulfill the responsibilities under auditing standards?d. What factors might an audit team notice that should heighten the concern about the existence of management fraud?e. Under what circumstances might an audit team have a duty to disclose management’s frauds to parties other than the company’s management and its board of directors?arrow_forward
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