Audit Committee and Corporate Fraud Prevention

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What is one of the primary functions of an independent audit committee?

Conducting financial audits
Serving as a sounding board for employees (correct)
Making investment decisions
Developing financial statements

What is a common factor contributing to corporate frauds?

Independent audit committee members
Active audit committee
Experienced audit committee members
Lack of independence of audit committee members (correct)

What is the primary purpose of an auditor's report?

To develop internal control procedures
To express an opinion on the reliability of financial statements (correct)
To provide an opinion on the company's future prospects
To conduct a financial audit

What guides auditors in their professional responsibility?

GAAS (A) Signup and view all the answers

What is the primary benefit of an independent audit committee?

Improved corporate governance (A) Signup and view all the answers

What are the three classes of auditing standards?

General qualification, field work, and reporting (A) Signup and view all the answers

What is the primary focus of SAS 109?

Obtaining sufficient knowledge of the organization's risk assessment procedures (A) Signup and view all the answers

What is a potential risk to business operations and transaction processing?

Organizational restructuring (C) Signup and view all the answers

What is the primary purpose of an effective accounting information system?

To identify and record all valid financial transactions (C) Signup and view all the answers

What is a key aspect of an accounting information system?

Transaction processing and financial reporting (D) Signup and view all the answers

What is a risk associated with entering into foreign markets?

Fluctuations in foreign currency exchange rates (B) Signup and view all the answers

What is a key component of an organization's risk assessment procedures?

Identifying and prioritizing risks related to financial reporting (C) Signup and view all the answers

What is the primary objective of Sections 302 and 404 of SOX?

To assign responsibilities to management for internal control (B) Signup and view all the answers

What is the recommended model for control assessment mentioned in the PCAOB Auditing Standard No. 5?

COSO (B) Signup and view all the answers

What is one of the procedures external auditors must perform quarterly according to Section 302?

Interview management regarding changes in internal control (C) Signup and view all the answers

What is one of the broad objectives of an organization's internal control system?

To safeguard assets of the firm (B) Signup and view all the answers

What is the role of the independent audit committee in relation to internal control?

To evaluate the effectiveness of internal control (D) Signup and view all the answers

What is the primary focus of the COSO framework?

Internal control and risk assessment (C) Signup and view all the answers