When Comparing the Auditor's Responsibility for Detecting Employee Fraud and for Detecting

question 13

Multiple Choice

When comparing the auditor's responsibility for detecting employee fraud and for detecting errors, the profession has placed the responsibility

• A) more on discovering errors than employee fraud.
• B) more on discovering employee fraud than errors.
• C) equally on discovering errors and employee fraud.
• D) on the senior auditor for detecting errors and on the manager for detecting employee fraud.

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Definitions:

Dividend

A portion of a company's earnings distributed to shareholders, usually in the form of cash or additional shares.

Jensen Measure

A performance metric that calculates the excess return of a portfolio over the predicted return by the Capital Asset Pricing Model (CAPM).

Risk-Free Return

The return on an investment with no risk of financial loss, typically associated with government bonds.

Treynor Measure

A performance metric on investment funds that accounts for the risk taken by the investment relative to the market risk as measured by beta.