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Unformatted text preview: a. Report better than actual performance in order to help your stock options. b. Needing to pay a large gambling debt. c. A weak internal control. d. "Borrowing" the petty cash fund on a temporary basis. e. None of the above. 78. Which statement is false? a. Accounting is the language of business, and internal controls set the ethical standards that govern business activities. b. The internal auditor's standard states that the auditor must consider the possibility of material irregularities or noncompliance during an internal audit. c. Tests of controls are always effective in detecting fraud. d. The internal auditor's competency framework does not stress technical accounting knowledge. e. None of the above. 79. If an internal auditor finds fraud, what communication step should not be taken? a. Notify management or the Board of Directors. b. A written report should be prepared. c. Draft of written report should be submitted to legal counsel for review. d. Report the offense to the appropriate authority. e. None of the above. 80. Which statement is false? a. Reactive auditing occurs when there are reasons to suspect that fraud may have occurred. b. Fraudsters often make up a company name with three letters. c. Proactive auditing occurs when there are reasons to suspect that fraud may have occurred. d. Tests of controls may not be effective in detecting fraud, because management can override controls. e. None of the above is false. 81. What best describes auditing that occurs when there are reasons to suspect that fraud may have occurred and appropriate audit steps are taken? a. Internal auditing. b. Top down auditing. c. Reactive auditing. d. Proactive auditing. e. Items b and d. 82. Which statement is false? a. External auditors take a big picture, macro view of the books and records of a company. b. Forensic accountants take a micro view of a business. c. Recounts of inventory and unannounced visits to locations are forensic techniques. Page 19 of 44 ...
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- Summer '10