When Assessing the Risk for Fraud, the Auditor Must Be

question 12

Multiple Choice

When assessing the risk for fraud, the auditor must be cognizant of the fact that

• A) the existence of fraud risk factors means fraud exists.
• B) analytical procedures must be performed on revenue accounts.
• C) horizontal analysis is not useful in helping to determine unusual financial statement relationships.
• D) the auditor cannot make inquiries about fraud to company personnel who have no financial statement responsibilities.

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Definitions:

Validity

refers to the degree to which a tool, test, or research accurately measures what it is intended to measure.

Reliability

The consistency of a measure or test over time, ensuring that repeated experiments or trials yield similar results.

Spuriousness

A relationship between two variables that appears to be causal but is actually due to both variables being influenced by one or more other variables.

Interpretations

The act of explaining or making sense of something, such as a text, action, or event.