According to the Committee of Sponsoring Organizations of the Treadway Commission (COSO).________Is "a process.
effected by an entity's board of directors, management, and other personnel, designed to provide reasonable assurance regarding the achievement of objectives relating to operations, reporting, and compliance."

• A.Financial reporting
• B.Fraud risk management
• C.Operational risk assessment
• D.Internal control

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Alicia, a government auditor, is conducting a financial statement audit of a public-sector entity in accordance with the International Standards of Supreme Audit Institutions. Which of the following is TRUE regarding Alicia's consideration of fraud during this engagement?

• A.In conducting the audit, Alicia's objectives are likely narrower than those of a private-sector financial statement audit.
• B.Alicia must comply with the requirements found in International Standard on Auditing 240 as they apply to both private- and public-sector audits.
• C.Alicia should focus on potential fraud and does not need to consider the possibility of abuse or other misconduct during the audit engagement.
• D.If Alicia identifies fraud during the audit engagement, she must immediately withdraw from the engagement.

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Joanna is leading the fraud risk assessment process for her organization. Which of the following considerations about the fraud risk assessment process is MOST ACCURATE and should be incorporated into Joanna's plans?

• A.To ensure the independence of the team members, a consultant or another external party must conduct the fraud risk assessment.
• B.If the individuals conducting the fraud risk assessment believe that fraud could not happen within the organization, then the assessment process should reflect that belief.
• C.The fraud risk assessment can be conducted effectively by people inside or outside of the organization.
• D.The fraud risk assessment is most effective when management's influence on the process is limited.

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Smith, a retail sales manager, wants to decrease the level of cash register over-and-short discrepancies among his sales team. According to behaviorist theories, which of the following options would be the MOST EFFECTIVE way for Smith to encourage his team members to keep their cash drawers in balance?

• A.Offer a bonus to anyone whose drawer reconciles perfectly for sixty days.
• B.Publicly call out and criticize employees whose cash drawers are over or short.
• C.Take away an hour of paid time off for each time the drawer is over or short
• D.Demote employees who continue to have reconciliation discrepancies

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Red works in the Accounting Department and prepares account reconciliations for his company. While following his normal procedures, Red misunderstands a note from a colleague, resulting in incorrect information being included on an account reconciliation that ultimately makes the account appear artificially inflated. Which of the following internal control failures has MOST LIKELY occurred?

• A.Collusion.
• B.Noncompliance.
• C.Breakdown.
• D.Error.

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