In Those Audits Where There Is a Heightened Risk of Fraud

question 12

Multiple Choice

In those audits where there is a heightened risk of fraud related to stockholders' equity accounts,which of the following will the auditor typically not perform?

• A)Confirm terms of equity arrangements and shares held directly with shareholders.
• B)Account for and vouch all proceeds from stock issues.
• C)Confirm with shareholders whether there are any side agreements.
• D)Review equity authorizations in the board meeting minutes.

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Definitions:

Unfamiliar Situation

A scenario or environment that is not known or recognized by an individual, often leading to feelings of discomfort or anxiety.

Attachment Style

Patterns of relating to others developed in early childhood that affect relationships throughout life.

Avoidant

A term often used to describe a pattern of behavior characterized by a desire to avoid certain situations, tasks, or interactions due to fear, anxiety, or perceived negative outcomes.

Rouge Test

A self-recognition test typically used on toddlers, where a mark is placed on the forehead and the child's reaction to its reflection is observed to assess self-awareness.