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:

Debt Investments-HTM

Investments in debt securities intended to be held to maturity, accounting for fixed-income investments until they are redeemed.

Bonds Mature

The point in time when a bond's principal amount is due to be paid back to the bondholder.

Interest Payments

Payments made to a lender by a borrower in return for the use of borrowed money, typically represented as an annual percentage of the loan principal.

Unrealized Gain

An increase in the value of an asset that has not been sold yet; hence, the gain is not reflected in the income statement.