Question

6. What is the most likely incentive for theft or fraud by employees?

A.Rumors of layoffs.

B.Ineffective oversight by those charged with governance.

C.Access to valuable inventory that is easy to resell.

D. Dompensation structures consistent with reasonable goaL

11 What is the most likely rationalization for theft or fraud by employees?

A.Valuable inventory is left unattended.

B.Needlessly complex transactions.

C.Perceived mistreatment by management.

D. Stock options that expire soon after the release of financial statements.

32. Which of the following audit procedures would be most effective in providing evidence regarding the existence of cash and cash equivalents?

A.Review bank reconciliations to verify amounts.

B.Test translation of foreign currency transactions.

C.Review bank confirmations to verify bank balances.

D. Perform analytical procedures to determine if amounts and volume of transactions match expectations.

Answer 1

Qn 6.

Most often the reason for a theft or fraud is not related to opportunity but due to dissatisfaction . Dissatisfaction mainly onm the front of Compensation. If ones compensation is not helping him meeting the ends, he may involve himself in fraudulant activities. hence the answer is Choice D

Qn 7.

As discussed above the main incentive is dissatisfaction and not opportunity. Here I feel both choices B and c can be right. Some people tend to commint fraud to avoid lengthy transactional procedures. Also mis treatment by employers also is a rationale behind committing fraud. But still I would say Choice C is better to Choice B.

Qn8.

Although reviewing bank reconcilations and bank balances can help in comparing cash and cash equivalants, a better audit procedure would be to do an analytical procedure to compare amount and volume of transactions. hence choice D is the right answer