Audit & Attestation Services Flashcards
7 cards from real ABA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Audit & Attestation Services flashcards as text
What is the auditor's primary responsibility regarding the detection of fraud?
Answer: To plan and perform the audit to obtain reasonable assurance that material misstatements due to fraud are detected
The auditor provides reasonable assurance of detecting material fraud but cannot guarantee detection of all fraud due to inherent limitations of an audit.
Which element of the fraud triangle refers to a person's ability to rationalize fraudulent behavior?
Answer: Rationalization
Rationalization is the third element of the fraud triangle, representing how a perpetrator justifies the fraudulent act to themselves.
Cutoff testing for sales transactions is designed to ensure that:
Answer: Transactions are recorded in the correct accounting period
Cutoff testing verifies that revenue and related receivables are recorded in the appropriate accounting period, not before or after they actually occurred.
An auditor uses a test of controls to assess:
Answer: The operating effectiveness of internal controls
Tests of controls evaluate whether internal controls are designed appropriately and operating effectively to prevent or detect material misstatements.
Which statement best describes a 'material weakness' in internal control?
Answer: A deficiency, or combination of deficiencies, where there is a reasonable possibility that a material misstatement will not be prevented or detected
A material weakness is the most severe type of control deficiency, indicating that a material misstatement may not be caught by existing controls.
In a compilation engagement, the accountant is required to:
Answer: Read the financial statements for obvious departures from GAAP
In a compilation, the accountant reads the financial statements to identify obvious material misstatements but does not verify or provide any assurance.
Which of the following is the best example of a preventive control?
Answer: Dual authorization required before issuing a check
Dual authorization prevents errors or fraud before they occur, making it a preventive control rather than a detective control.