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QUESTION: 396

The internal audit activity's responsibility to follow up on reported audit findings should be defined in the

Engagement memo issued prior to each audit assignment.
Mission statement of the audit committee.
Internal audit activity's written charter.
Purpose statement within the applicable audit report.

Answer(s): C

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QUESTION: 397

Which of the following does not represent a difficulty in using red flags as fraud indicators?

Many common red flags are also associated with situations where no fraud exists.
Some red flags are difficult to quantify or to evaluate.
Red flag information is only gathered in extraordinary circumstances.
The red flags literature is not well enough established to have a positive impact on auditing.

Answer(s): D

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QUESTION: 398

The most common motivation for management fraud is the existence of

Vices, such as a gambling habit.
Job dissatisfaction.
Financial pressures on the organization.
The challenge of committing the perfect crime.

Answer(s): C

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QUESTION: 399

Which of the following procedures would be most helpful in providing additional evidence when an auditor suspects that an unidentified employee is submitting and approving invoices for payment?

Use generalized audit software to identify invoices from vendors with post office box numbers or other unusual features. Select a sample of those invoices and trace to supporting documents such as receiving reports.
Select a sample of payments made during the year and investigate each one for approval.
Select a sample of receiving reports representative of the period under investigation and trace to approved payment. Note any items not properly processed.
Select a sample of invoices paid during the past month and trace them to appropriate vendor accounts.

Answer(s): A

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