level: Fraud or Error
Questions and Answers List
level questions: Fraud or Error
| Question | Answer |
|---|---|
| What are the three (3) categories associated with the 'Fraud Triangle'? | 1. Opportunity 2. Attitude/Rationalization 3. Incentive/Pressure |
| What are the two types of fraud relevant to an audit? | 1. Fraudulent Financial Reporting 2. Misappropriation of Assets (Theft) *The intent to deceive is an essential aspect of fraud. Fraud may be material or immaterial to the financial statements. In planning the audit engagement, the auditor focuses on detecting fraud that is material to the financial statements. |
| What are the three types of misstatements? | 1. Factual misstatements—Misstatements for which there is no doubt. 2. Judgmental misstatements—Differences due to the judgments of management that the auditor considers unreasonable or to the selection of accounting policies that the auditor views as inappropriate. 3. Projected misstatements—The auditor's best estimate of misstatements in populations as suggested by audit sampling. |