Question 1

Which of the following is a NYSE mandated guideline for corporate governance?

Accepted Answer

The NYSE mandates that boards must have an audit committee composed of a minimum of three independent directors to ensure oversight and integrity in the company's financial reporting processes.

Question 2

Enron: A Fraud Example What were the failures that allowed the Enron fraud to occur?

Accepted Answer

The answer of Enron: A Fraud Example What were the...

Question 3

Which of the following is not a specific responsibility of an audit committee as mandated by the NYSE?

Accepted Answer

Creating and implementing internal controls is typically the responsibility of management, not the audit committee. The audit committee's role involves oversight of the financial reporting process, the audit process, the company's system of internal controls, and compliance with laws and regulations, but not the creation and implementation of internal controls.

Question 4

Which of the following best describes how corporate governance influences an organization?

Accepted Answer

Corporate governance is the system of processes, practices, principles, and values that govern how an organization is operated and controlled. The ultimate goal of corporate governance is to ensure that the organization achieves its objectives while operating within legal, ethical, and societal norms. Corporate governance influences an organization by creating a framework that exerts control and requires accountability for the resources entrusted to the organization. This includes financial resources, human resources, and other assets. By holding management accountable for the allocation and utilization of these resources, corporate governance helps to ensure that the organization operates efficiently, effectively, and in the best interests of its stakeholders.

Question 5

Which of the following is a specific governance responsibility of the board of directors of a public corporation?

Accepted Answer

Approving corporate strategy is a specific governance responsibility of the board of directors of a public corporation. Managing and reviewing operations is the responsibility of management, implementing effective internal controls is a joint responsibility of management and the board, and selecting the external audit firm is also the responsibility of the board, but not a specific one.

Question 6

Fraud consideration by auditors John Beasley is interviewing with public audit firms to become an auditor.John does not believe that fraud is a "big deal" in client organizations and argues that most individuals in management of companies are "honest people." He believes that auditors are becoming too cynical. Describe your response to John's attitude and discuss the major types of fraud that occur in companies.

Accepted Answer

The answer of Fraud consideration by auditors John Beasley is...

Question 7

Which of the following are management responsibilities under the Sarbanes-Oxley Act of 2002?

Accepted Answer

The answer of Which of the following are management responsibilities...

Question 8

Audit Committee Responsibilities Describe the responsibilities of audit committees,and list at least four responsibilities that the NYSE has mandated for audit committees.

Accepted Answer

The answer of Audit Committee Responsibilities Describe the responsibilities of...

Question 9

Protection Transparency,Inc.is being audited by Messer and Bromely,LLP.During the assessment of fraud,Messer and Bromely discover that the controller has been creating fictional sales and posting them to the general ledger.Who should the auditors make aware of this issue?

Accepted Answer

The auditors should inform the chairman of Protection Transparency's audit committee as this is the appropriate authority to oversee the internal control system and the financial reporting process of the company. The audit committee can then take appropriate actions, such as conducting an investigation and informing the management and legal counsel. The police or predecessor auditor may also be involved, but the audit committee should be the initial point of contact.

Question 10

Which of the following is a stated principle of a NYSE report identifying key core governance principles?

Accepted Answer

Effective corporate governance should be integrated with the company's business strategy, as it ensures that governance practices support the company's overall goals and objectives.

Question 11

Which of the following best describes the audit committee's oversight responsibility?

Accepted Answer

The audit committee's oversight responsibility includes providing oversight of reporting outside the organization, providing oversight of the internal auditing function, and providing oversight of the external audit. Therefore, option D is the correct answer.

Question 12

Who is responsible for operating an enterprise?

Accepted Answer

The responsibility for operating an enterprise falls squarely on the management team. They are responsible for setting the strategic direction, overseeing day-to-day operations, managing finances, and ensuring compliance with regulations. While auditors, the audit committee, and the board of directors play important roles in monitoring and providing oversight, they are not responsible for running the company.

Question 13

Under the NYSE corporate governance guidelines,which of the following committees should a corporation's board of directors establish?

Accepted Answer

The NYSE corporate governance guidelines require a corporation's board of directors to establish three committees: Nominating/corporate governance committee, audit committee, and compensation committee. Therefore, the correct choice is D, all of the above.

Question 14

Which of the following is a specific corporate governance responsibility of executive management?

Accepted Answer

Implementing an effective ethical environment is a specific corporate governance responsibility of executive management. The other options are responsibilities of the board of directors or the audit committee.

Question 15

Elements of Fraud Research consistently shows that there are three elements associated with most frauds.List these elements and at least three indicators that the element may exist for a particular company.

Accepted Answer

The answer of Elements of Fraud Research consistently shows that...

Question 16

Fraudulent financial reporting What are three common ways in which fraudulent financial reporting takes place?

Accepted Answer

The answer of Fraudulent financial reporting What are three common...

Question 17

Auditor independence under the Sarbanes-Oxley Act What are four requirements of the Sarbanes-Oxley Act that seek to protect auditor independence?

Accepted Answer

The answer of Auditor independence under the Sarbanes-Oxley Act What...

Question 18

Which of the following is not one of management's responsibilities?

Accepted Answer

Engaging a qualified auditor is not a direct responsibility of management. However, management has a responsibility to ensure that the organization engages a qualified auditor to conduct an independent audit.

Question 19

Auditor's response to fraud risk factors The auditor assesses the identified fraud risks after taking into account an evaluation of the client's programs and controls.How might the auditor respond to the results of the assessment of higher fraud risk?

Accepted Answer

The answer of Auditor's response to fraud risk factors The...

Quiz 2: The Auditors Responsibilities Regarding Fraud and Mechanisms to Address Fraud: Regulation and Corporate Governance