ACC555 Midterm Week 4A+

1.   Which of the following statements is most correct regarding errors and fraud?
**

 An error is unintentional, whereas fraud is intentional.


Fraud occurs more often than errors in financial statements.


Errors are always fraud and fraud is always errors.


Auditors have more responsibility for finding fraud than errors.

Coaching tip: Fraud is "on purpose." Accidents are "errors."

2. If management insists on financial statement disclosures that the auditor finds unacceptable, the auditor can:
Issue an adverse audit report; Issue a qualified audit report
**Yes; Yes
No; No
Yes; No
No; Yes

Coaching tip: He can also withdraw from the audit.

3. If management insists on financial statement disclosures that the auditor finds unacceptable, the auditor can do all but which of the following?


issue an adverse audit report


** issue a disclaimer of opinion


withdraw from the engagement


issue a qualified audit report

4. The responsibility for adopting sound accounting policies and maintaining adequate internal control rests with the:


board of directors


** company management
 financial statement

auditor
company's internal audit department