1. What is the most likely incentive for theft or fraud by employees?
A. Rumors of layoffs.
B. Ineffective oversight by those charged with governance.
C. Access to valuable inventory that is easy to resell.
D. Dompensation structures consistent with reasonable goaL
2. What is the most likely rationalization for theft or fraud by employees?
A. Valuable inventory is left unattended.
B. Needlessly complex transactions.
C. Perceived mistreatment by management.
D. Stock options that expire soon after the release of financial statements.
3. Which of the following audit procedures would be most effective in providing evidence regarding the existence of cash and cash equivalents?
A. Review bank reconciliations to verify amounts.
B. Test translation of foreign currency transactions.
C. Review bank confirmations to verify bank balances.
D. Perform analytical procedures to determine if amounts and volume of transactions match expectations.