The most difficult type of misstatement to detect is fraud based or a. the overr

Question

The most difficult type of misstatement to detect is fraud based or a. the overrecording of transactions b· the nonrecording of transactions c. recorded transactions in subsidiaries d. related party receivables e. none of the above 22. When management overstates inventory,t current year's income and the next year's income. a. Overstates, does not affect c. Understates, overstates d. Overstates, understates 23.f skimming has been in practice for years in a business, why might t be hard to detect using horizontel analysis? a. Comparing a year in which receipts have bean skimmed to other years in which receipts have been skimmed will usually not reveal differences b. Horizantal analysis is typically performed in industries that have high skimming rates c. Gross margins for the industry typically will not reveal any fraud when evaluated vis horizontal analysis d. Skimming typically is revealed on the income statement and horizontal analysis is only done on baiance sheet accounts e. None of the above 24 aPlanningtadiadhedienerstandingregandingdienissues relatingto In planning and preparing for engagements, paramount considerations inchude Understanding the client and the cient's needs. b. Establishing a clear understanding regarding the scope and nature of the services to be provided and the responsibilities of both the member and the client Establishing a clear understanding regarding any issues relating to confidentiality of materials and possible conflicts of interest, All of the above. c. d. Smart embezzlers realize that when making false journal entries, reducing is not a good concealment method a. Time spent at work b. Liabilities C. Management interaction d. Time spent making journal entry 26. Which of the folowing ia not a form of vendor taua? a. Overcharge for purchased goods b. Shipment of inferior goods c. Nonshipment of goods even though payment is made d. Not paying for goods purchased e. None of the above

Explanation / Answer

In detection of fraud, the auditor faces the most difficulty when a transaction is not recorded at all. Non -recording of transaction results in the absence of audit trail which is the primary requirement for fraud detection.

Thus, correct option is B.

*First question has been answered as per Chegg's policy.

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