Under Sarbanes-Oxley, chief executive officers and chief financial officers are required to personally certify annual and quarterly SEC filings.Which of the following is an item that they must certify in their reports?
All of the above.
They have disclosed to the audit committee any material control weakness.
The financial statements were prepared in conformity with GAAP.
The company’s internal controls have prevented or detected all material instances of fraud during the last year.
Walden Industries is being sued by a former employee for wrongful termination. It is probable that the company will lose the case and be ordered to pay the plaintiff a significant sum of money. If Walden fails to report this information somewhere in its financial statements, it is violating the GAAP concept of:
Investigating registered public accounting firms and their employees, conducting disciplinary hearings, and imposing sanctions where justified are duties of which of the following bodies?
General Accounting Office’s Oversight Board
AICPA’s Accounting Standards Board
SEC’s Subcommittee on Corporate Governance
Public Company Accounting Oversight Board
Senior management is most likely to understate business performance in the financial statements for which of the following reasons?
To reduce the value of an owner-managed business for purposes of a divorce settlement
To increase the value of a corporate unit whose management is planning a buyout
To comply with loan covenants
To trigger performance-related compensation or earn-out payments
Fraudulent manipulation of the going concern assumption usually results from an organization trying to conceal its terminal business situation.
Which of the following is a duty of the Public Company Accounting Oversight Board?
Registering accounting firms that audit publicly traded companies
Establishing or adopting standards relating to audits of publicly traded companies
Enforcing compliance with professional standards and securities laws relating to public company audits
All of the above
Intentionally reporting product sales in the financial statements for the period prior to when they actually occurred is a violation of which generally accepted accounting principle?
When a fraudster feeds fictitious information into the accounting system in order to manipulate reported results, this is called:
going outside the accounting system.
beating the accounting system.
playing the accounting system.
boing around the accounting system.
The Sarbanes-Oxley Act provides that members of the audit committee may receive compensation for consulting or advisory work only if approved by a majority of the board members.
The term “financial statement” does not include a statement of cash receipts and disbursements, because this type of presentation violates the required use of accrual accounting under GAAP.
According to COSO’s study, Fraudulent Financial Reporting: 1998-2007, which of the following is the most likely to commit financial statement fraud?
The chief executive officer and/or chief financial officer
Which of the following is a reason that a chief executive officer might commit financial statement fraud?
To conceal the company’s true performance
To receive or increase a performance bonus
To avoid termination due to poor performance
All of the above
Which of the following is not one of the provisions established under the Sarbanes-Oxley Act?
Code of ethics for senior financial officers
Criminal penalties for altering documents
Management assessments of internal controls
The creation of the Public Accounting Standards Board
A company’s financial statements are the responsibility of:
the accounting department.
the independent auditors.
The preferred and easiest method of concealing liabilities and expenses is to simply fail to record them.
Which of the following is a red flag associated with fictitious revenues?
An unusual decline in the number of days’ purchases in accounts payable
Recurring losses while reporting increasing cash flows from operations
An unusual decrease in gross margin
Several unusual and highly complex sales transactions recorded close to the period end
While conducting the annual audit of Bluebird Company’s financial statements, Elsie Finnegan, CFE, CPA, came across some fishy findings. The company recorded several large and unusual sales at the end of the fiscal year to customers Elsie had never heard of. Further, all of these sales occurred within the company’s specialty division, which had previously been in danger of closing due to recurring losses. Based on these findings, what type of financial statement fraud is likely occurring?
All of the above
Staff Accounting Bulletin Topic 13, “Revenue Recognition,” indicates that revenue is considered realized or realizable and earned when four criteria are met. Which of the following is one of these criteria?
Collectability is reasonably assured.
Goods have been scheduled to be delivered or services have been scheduled to be rendered within the current fiscal period.
The seller has located alternate buyers.
All of the above.
Capitalizing revenue-based expenses as depreciable assets will cause income to be ____________ in the current period and _______________ in future periods.
Which of the following is not an example of financial statement fraud?
Deliberate omission of material disclosures
All of the above are examples of financial statement fraud
Falsification of material financial records, supporting documents, or business transactions
Unintentional misapplication of accounting principles
Recurring attempts by management to justify marginal or inappropriate accounting treatments on the basis of materiality is a red flag associated with which type of financial statement fraud?
We can successfully deal with all kinds of school assignments corresponding to various academic disciplines. Among these school papers are: