Brody Chapter 11 Multiple Choice


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Financial statement fraud is usually committed by: Both a and b. (a. Executives. b. Managers)
Which officer in a company is most likely to be the perpetrator of financial statement fraud? Chief executive officer (CEO)
When looking for financial statement fraud, auditors should look for indicators of fraud by: Evaluating changes in financial statements
The three aspects of management that a fraud examiner needs to be aware of include all of the following except: Their religious convictions.
Which of the following is least likely to be considered a financial reporting fraud symptom, or red flag? Size of the firm (??)
Many indicators of fraud are circumstantial; that is, they can be caused by nonfraud factors. This fact can make convicting someone of fraud difficult. Which of the following types of evidence would be most helpful in proving that someone committed fraud? A repeated pattern of similar fraudulent acts
In the Phar-Mor fraud case, several different methods were used for manipulating the financial statements. These included all of the following except: Funneling losses into unaudited subsidiaries
Most financial statement frauds occur in smaller organizations with simple management structures, rather than in large, historically profitable organizations. This is because: c. Management fraud is more difficult to commit when there is a more formal organizational structure of management.
Management fraud is usually committed on behalf of the organization rather than against it. Which of the following would not be a motivation of fraud on behalf of an organization? CEO needs a new car
All of the following are indicators of financial statement fraud except: Threat of a hostile takeover. (??)
During an audit, an auditor considers the conditions of the auditee and plans the audit accordingly. This is an example of which of the following? First-order reasoning
In the context of strategic reasoning, if an auditor only follows the established audit plan and does not consider other factors relating to the auditee, then this is an example of which of the following? Zero-order reasoning
In recent years, many SEC investigations have taken place on the improper issuance of stock options to corporate executives. These practices increase executive compensation at the expense of shareholders. This practice is known as: Backdating stock options.