According to Professional Audit Standards, How Might an Understanding of the Nature

question 41

Multiple Choice

According to professional audit standards, how might an understanding of the nature of fraud that may occur in the client organization be identified by an audit firm?

• A) Fraud training courses from actual corporate fraud ex-criminals.
• B) Conducting a brainstorming session with the members of the audit team.
• C) Circulating a survey to the client company employees for completion.
• D) Discussions with other audit firms.

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Definitions:

Subsidiary Ledgers

Detailed records that contain information about specific accounts, which together support and reconcile with summary amounts in the general ledger.

Daily Postings

The routine process of recording transactions in the books of accounts or ledgers on a daily basis to ensure financial records are up-to-date.

Control Account

An account in the general ledger used to simplify the recording of transactions and track the total amounts for financial statement purposes, often summarizing the details that are held in a subsidiary ledger.

Special Journals

Accounting books or ledgers used for recording and categorizing specific types of transactions such as sales, purchases, cash disbursements, and cash receipts in a more efficient manner.