In Connection with the Examination of Financial Statements,an Auditor Could

question 44

Multiple Choice

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

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

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Definitions:

Diversification

The process of allocating investments among different financial assets or sectors to reduce risk in a portfolio.

SBU

Strategic Business Unit, a fully-functional unit of a business that has its own vision and direction, often with responsibility for its own profitability.

Dog

A domesticated carnivorous mammal that typically has a long snout, an acute sense of smell, non-retractable claws, and a barking, howling, or whining voice.

BCG

Refers to the Boston Consulting Group Matrix, a strategic planning tool that categorizes a company's business units or products into four categories (Stars, Cash Cows, Question Marks, and Dogs) based on market growth and market share.