Corporate Governance and Audit
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Questions and Answers

An auditor should assess management's philosophy and ability to identify/respond to ______.

risk

What should an auditor assess when evaluating a company's risk management?

  • The company's financial statements
  • The company's marketing strategy
  • Management's philosophy and ability to identify/respond to risk (correct)
  • The company's employee benefits plan

    • What percentage of fraudulent financial reporting cases involve the CEO or CFO?

  • 25%
  • 50%
  • 75%
  • 90% (correct)

    • An auditor should assess management's philosophy and ability to identify/respond to ______.

    <p>risk</p> Signup and view all the answers

    What is the significance of assessing management's philosophy and ability to identify/respond to risk?

    <p>It helps the auditor identify potential areas of fraud or misstatement.</p> Signup and view all the answers

    In over 340 cases of fraudulent financial reporting, the CEO or CFO was involved in almost ______% of cases.

    <p>90</p> Signup and view all the answers

    In over 340 cases of fraudulent financial reporting, the CEO or CFO was involved in almost ______% of cases.

    <p>90</p> Signup and view all the answers

    In how many cases of fraudulent financial reporting was the CEO or CFO involved?

    <p>90%</p> Signup and view all the answers

    In what percentage of cases involving fraudulent financial reporting was the CEO or CFO involved?

    <p>90%</p> Signup and view all the answers

    What is included in a company's governance?

    <p>Organizational structure, board of directors, and audit committee</p> Signup and view all the answers

    What is the purpose of effective governance?

    <p>To ensure appropriate risk-taking</p> Signup and view all the answers

    A company's governance includes organizational structure, board of directors, and ______ committee.

    <p>audit</p> Signup and view all the answers

    What does a company's governance include?

    <p>Organizational structure, board of directors, and audit committee</p> Signup and view all the answers

    A company's governance includes organizational structure, board of directors, and ______ committee.

    <p>audit</p> Signup and view all the answers

    What does a company's governance include?

    <p>Organizational structure, board of directors, and audit committee</p> Signup and view all the answers

    Effective governance helps ensure appropriate risk-taking and reduces ______ accounting.

    <p>aggressive</p> Signup and view all the answers

    How does effective governance help reduce aggressive accounting?

    <p>By ensuring appropriate risk-taking</p> Signup and view all the answers

    Effective governance helps ensure ______ risk-taking and reduces aggressive accounting.

    <p>appropriate</p> Signup and view all the answers

    What is the benefit of effective governance?

    <p>It reduces aggressive accounting.</p> Signup and view all the answers

    What does the SEC require public companies to disclose?

    <p>Whether they have a code of ethics for senior management</p> Signup and view all the answers

    What does the SEC require public companies to disclose regarding senior management?

    <p>Whether they have a code of ethics</p> Signup and view all the answers

    What should auditors examine regarding a company's code of ethics?

    <p>Any changes/waivers</p> Signup and view all the answers

    The SEC requires public companies to disclose whether they have a code of ethics for ______ management.

    <p>senior</p> Signup and view all the answers

    What does the SEC require public companies to disclose?

    <p>Their code of ethics for senior management.</p> Signup and view all the answers

    The SEC requires public companies to disclose whether they have a code of ethics for ______ management.

    <p>senior</p> Signup and view all the answers

    Why should auditors examine a company's code of ethics and any changes/waivers?

    <p>To ensure compliance with legal requirements</p> Signup and view all the answers

    What are corporate minutes?

    <p>The official record of board of directors and stockholders' meetings</p> Signup and view all the answers

    Why should auditors examine a company's code of ethics and any changes/waivers?

    <p>To ensure that the company is following ethical practices.</p> Signup and view all the answers

    Auditors should examine the company's code of ethics and any ______/waivers.

    <p>changes</p> Signup and view all the answers

    Auditors should examine the company's code of ethics and any changes/______.

    <p>waivers</p> Signup and view all the answers

    What is the purpose of reading corporate minutes during an audit?

    <p>To obtain relevant information for the audit.</p> Signup and view all the answers

    Information from the minutes should be followed up on to ensure ______.

    <p>compliance.</p> Signup and view all the answers

    Corporate minutes are the official record of board of directors and stockholders' ______.

    <p>meetings</p> Signup and view all the answers

    What are corporate minutes?

    <p>The official record of board of directors and stockholders' meetings</p> Signup and view all the answers

    How should auditors supplement their review of minutes?

    <p>By inquiring with the audit committee or full board</p> Signup and view all the answers

    Study Notes

    • An auditor should assess management's philosophy and ability to identify/respond to risk.
    • In over 340 cases of fraudulent financial reporting, the CEO or CFO was involved in almost 90% of cases.
    • A company's governance includes organizational structure, board of directors, and audit committee.
    • Effective governance helps ensure appropriate risk-taking and reduces aggressive accounting.
    • The SEC requires public companies to disclose whether they have a code of ethics for senior management.
    • Auditors should examine the company's code of ethics and any changes/waivers.
    • Corporate minutes are the official record of board of directors and stockholders' meetings.
    • Auditors should read the minutes to obtain relevant information for the audit.
    • Information from the minutes should be followed up on to ensure compliance.
    • Auditors may supplement their review of minutes with inquiries to the audit committee or full board.

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    Description

    Test your knowledge of corporate governance and auditing with this informative quiz. Learn about the importance of assessing management's ability to identify/respond to risk, the prevalence of CEO/CFO involvement in fraudulent financial reporting, and the elements of effective governance. Explore the SEC's requirements for disclosing a code of ethics and the role of corporate minutes in the audit process. Sharpen your skills with this essential quiz for auditors and corporate professionals.

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