Preventing Fraud and Errors in Financial Statements
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Questions and Answers

Which of the following can result in fraud and errors that can cause financial statements to be materially misstated?

  • Lack of supervision (correct)
  • Adequate segregation of duties
  • Granting appropriate access privileges
  • Assigning compatible duties to an individual

    • Access control issues can be similar to which of the following exposure issues?

  • Assigning incompatible duties to an individual
  • Concealing the crime
  • Granting inappropriate access privileges (correct)
  • Collusion

    • What can assigning incompatible duties to an individual often lead to?

  • Appropriate access privileges
  • Unauthorized access to assets
  • Concealing the crime (correct)
  • Collusion

    • What can be used to test all of the management assertions outlined in Table 10.1?

    <p>Reviewing the segregation of duties</p> Signup and view all the answers

    What may not be apparent from an organizational chart?

    <p>Covert relationships</p> Signup and view all the answers

    Which of the following is the purpose of output controls?

    <p>To identify operational and internal control problems</p> Signup and view all the answers

    What is an example of an output control?

    <p>Exception report derived from the Suppliers Invoice file</p> Signup and view all the answers

    Where is system output needed for processing accuracy review and error detection?

    <p>At intermediate junctures</p> Signup and view all the answers

    What can an exception report derived from the Suppliers Invoice file help management assess?

    <p>Operational performance of the accounts payable process</p> Signup and view all the answers

    What should the total of all reductions to accounts payable equal to?

    <p>The total of all cash disbursements to vendors</p> Signup and view all the answers

    Which of the following is NOT a purpose of output controls?

    <p>To provide end-of-day reporting</p> Signup and view all the answers

    Which type of report can help management assess the operational performance of the accounts payable process?

    <p>Exception report derived from the Suppliers Invoice file</p> Signup and view all the answers

    What can output controls be designed to identify?

    <p>Operational and internal control problems</p> Signup and view all the answers

    At which junctures is system output needed for processing accuracy review and error detection?

    <p>Intermediate junctures</p> Signup and view all the answers

    What can an exception report derived from the Suppliers Invoice file help identify?

    <p>Discounts lost</p> Signup and view all the answers

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