During an external audit of an organization's financial statements, Saskia, the external auditor, uncovers significant internal control deficiencies at the organization. She believes these deficiencies could result in a material misstatement of the financial statements. Which of the following should Saskia do regarding these findings?

• A.Saskia should provide a written communication about her findings to the relevant regulatory agencies.
• B.Saskia should suspend the current audit engagement and begin a new audit focused on the internal control deficiencies.
• C.Saskia should communicate the deficiencies in writing to those charged with governance.
• D.Saskia should withdraw from the audit engagement immediately and issue a disclaimer on any prior work performed.

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Which principle of corporate governance pertains to the disclosure of all material matters that the shareholders need to make timely and informed decisions regarding their investment in the company?

• A.Transparency
• B.Fairness
• C.Responsibility
• D.Accountability

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Which of the following is BEST classified as a type of external fraud risk?

• A.Collusion between contractors
• B.Adding ghost employees to payroll
• C.Reporting revenue in the wrong period
• D.Embezzling incoming customer payments

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Which of the following is TRUE regarding International Standard on Auditing (ISA) 240?

• A.ISA 240 requires auditors to effectively raise awareness about the risk of fraud within the audited organization.
• B.ISA 240 establishes standards regarding the auditor's responsibility to consider fraud in an audit of financial statements.
• C.ISA 240 establishes auditors as being primarily responsible for the prevention and detection of fraud within an organization.
• D.ISA 240 creates requirements for management regarding the establishment of a holistic fraud risk management program.

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Which of the following is one of the four recommendations made by the National Commission on Fraudulent Financial Reporting (the Treadway Commission) to reduce the probability of fraud in financial reports?

• A.Provide adequate resources and authority to the internal audit function.
• B.Have a mandatory independent finance committee.
• C.Assign oversight of the hotline reporting program to company shareholders.
• D.Develop a written charter for the audit committee.

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