Practice Quiz

Forensic Accounting

Category - ABFA General Topics

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Which of the following is CORRECT?
  1. Financial investigation involves checking for fraud
  2. Fraud is committed by internal people of the company
  3. Fraud is committed to overestimate the value of company assets
  4. All of the above
  5. Auditors who go by the book are more likely to detect fraud early
  6. Auditors who just follow the procedural outline are less likely to uncover fraud
  7. Deviating from the standards cues is not allowed for the auditor
  8. There is always a 50% chance that an auditor will detect fraud
  9. Auditor always uses statistical sampling
  10. Auditor always uses random sampling
  11. Auditor always uses haphazard sampling
  12. Dependent upon the cost-benefit-time analysis before choosing sampling method
Explanation
Answer: D - An auditor cannot inspect and evaluate all the entries in regards to a piece of financial information. An appropriate method of sampling is chosen to select the best possible sample that is representative of the population. Whether to use statistical, random, or haphazard sampling is a matter of judgment, and requires prior investigation into the cost, time, and benefit associated with every method.
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