When Auditing Financial Statements and Finding Indications of a Possible

question 5

Multiple Choice

When auditing financial statements and finding indications of a possible misappropriation of assets,independent auditors should

• A)investigate fully to determine the total amount of the misappropriation.
• B)determine which accounts are affected and the amount by which they are overstated or understated.
• C)determine the methods by which the misappropriation was carried out.
• D)identify persons who are likely responsible for the misappropriation and obtain evidence about some other fraud indications in their work.
• E)all of these.

---

Definitions:

Theories

Systematically organized principles or explanations that have been accepted to explain certain phenomena or behaviors.

Patterns

Recurring characteristics or events that are observable in data, nature, or behaviors.

Probability Sampling

A sampling technique in which every member of the population has a known and non-zero chance of being selected.

Simple Random Sampling

A method of selecting a sample from a population in which every member has an equal chance of being chosen.