In Connection with the Examination of Financial Statements, an Independent

question 32

Multiple Choice

In connection with the examination of financial statements, an independent auditor could be responsible for failure to detect a material fraud if:

• A) the auditor planned the work in a hasty and inefficient manner.
• B) the auditor performing important parts of the work failed to discover a close relationship between the treasurer and the cashier.
• C) statistical sampling techniques were not used on the audit engagement.
• D) the fraud was perpetrated by one trusted client employee, who circumvented the existing internal controls.

Understand the application of CPI to convert past salaries or prices to their present-day equivalents.

Analyze how changes in the prices of goods and services in a simple economy affect the CPI.

Understand what real interest rates reveal about the economy that nominal rates do not.

Discuss the major problems associated with using the CPI as a measure of the cost of living.

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Definitions:

Recovers From Errors

The ability of a system or process to handle errors gracefully and continue operating.

Site Visit

The process of traveling to a location to review, inspect, or perform work as part of a project, assessment, or evaluation.

Staffing Test Team

A staffing test team involves the process of recruiting and organizing professionals tasked with testing products, software, or systems for bugs, performance issues, and other quality criteria.

Preparing Test Materials

The process of creating and organizing assessments, quizzes, or exams to evaluate knowledge or skills.