F1 Test Ch 9-11

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  • 1/25 Questions

    Mohammad is a newly qualified accountant working in a large international company. He is finding great difficulty in doing his work and supervising the work of live partly qualified accountants. He deals with issues as they arise but is finding that more and more work is piling up. He works standard hours and is not emitted to be paid ever time. He has working late on several occasions but he still cannot keep up with the demands made upon him. He is now under pressure from his internal customers who are all demanding that he responds to their requests. He has reason to believe that some of his staff are now capable of undertaking the working he gives them Which TWO of the following courses of action would you suggest that Mohammad undertakes?

    • Work even longer hours
    • Plan further ahead
    • Delegate more tasks
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F1 Test Ch 9-11 - Quiz
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  • 2. 

    In the context of fraud, ‘teeming and lading’ is most likely to occur in which area of operation?

    • Sales

    • Quality Control

    • Advertising

    • Despatch

    Correct Answer
    A. Sales
    Explanation
    Teeming and lading refers to a fraudulent activity where funds are siphoned off by an employee before they are recorded in the company's books. This typically occurs in the sales department where there is a high volume of transactions and cash handling. By manipulating sales records, an employee can divert funds for personal gain without being detected. Therefore, sales is the most likely area of operation where teeming and lading would occur.

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  • 3. 

    The leadership style that least acknowledges the contribution that subordinates have to make is ___________. Which word correctly completes the sentence above

    • Authoritarian

    • Autocratic

    • Assertive

    Correct Answer
    A. Autocratic
    Explanation
    The word "autocratic" correctly completes the sentence. An autocratic leadership style is characterized by a leader who makes decisions without consulting or considering the input of subordinates. This style does not acknowledge or value the contributions that subordinates have to make, as the leader maintains full control and authority over decision-making.

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  • 4. 

    Which of the following is an observation of Elton Mayo’s human relations approach to management?

    • Work satisfaction is based on recognition, security and being part of a team

    • Employees are driven by monetary rewards above all else

    • Good communication and emotional connection between workers has little effect on productivity

    • Management’s role is to persuade subordinates to meet organizational goals

    Correct Answer
    A. Work satisfaction is based on recognition, security and being part of a team
    Explanation
    Elton Mayo's human relations approach to management emphasizes the importance of recognizing and satisfying the social and psychological needs of employees. According to Mayo, work satisfaction is not solely driven by monetary rewards but is also influenced by factors such as recognition, security, and being part of a team. This approach highlights the significance of creating a positive work environment that fosters good communication, emotional connection, and teamwork in order to enhance productivity and employee satisfaction.

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  • 5. 

    Which of the following is not a method of data validation?

    • Audit trails

    • Range checks

    • Control totals

    • Limit check

    Correct Answer
    A. Audit trails
    Explanation
    Audit trails are not a method of data validation. Audit trails are used to track and record any changes made to data, providing a history of who accessed or modified the data. Data validation methods, on the other hand, are used to ensure the accuracy and integrity of data, such as range checks, control totals, and limit checks.

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  • 6. 

    Which TWO of the following are prerequisites for fraud in circumstances where duties are not segregated?

    • Collaboration

    • Collusion

    • Dishonesty

    • Motivation

    Correct Answer(s)
    A. Dishonesty
    A. Motivation
    Explanation
    In order for fraud to occur in circumstances where duties are not segregated, two prerequisites are necessary. Dishonesty is one of the prerequisites as it involves intentionally deceiving or misleading others for personal gain. Motivation is the other prerequisite as it provides the incentive or drive for someone to engage in fraudulent activities. Collaboration and collusion, while often associated with fraud, are not prerequisites in this specific scenario where duties are not segregated.

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  • 7. 

    Which of the following is not an example of a business risk that may indicate potential fraud?

    • Complex structure

    • Market opinion

    • Profit levels deviating from norm

    • Expensive lifestyles

    Correct Answer
    A. Expensive lifestyles
    Explanation
    Expensive lifestyles are not an example of a business risk that may indicate potential fraud. While complex structure, market opinion, and profit levels deviating from the norm can all be indicators of potential fraud, expensive lifestyles do not necessarily indicate fraudulent activity. While they may suggest excessive spending or personal financial mismanagement, they do not directly relate to fraudulent behavior within a business context.

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  • 8. 

    According to Kotter, leadership is primarily about which of the following?

    • Change

    • Complexity

    • Choice

    • Challenge

    Correct Answer
    A. Change
    Explanation
    According to Kotter, leadership is primarily about change. This means that leaders are responsible for driving and facilitating change within an organization or a team. They need to have the ability to identify the need for change, communicate it effectively, and guide others through the process of implementing and adapting to the change. Leadership involves inspiring and motivating others to embrace change and helping them navigate through the challenges and uncertainties that come with it. By focusing on change, leaders can create a culture of continuous improvement and innovation within their organizations.

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  • 9. 

     The following definitions of internal and external audit true or false? Internal audit is a function which reports to the management of a company on the financial and operating systems

    • True

    • False

    Correct Answer
    A. True
    Explanation
    The statement is true because internal audit is a function within a company that is responsible for evaluating and assessing the financial and operating systems. The internal audit team reports its findings and recommendations to the management of the company, providing them with valuable insights and helping to improve the overall efficiency and effectiveness of the organization.

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  • 10. 

    Ben is responsible for conducting internal checks Preparing which TWO of the following for part of his role?

    • Supervision schedules

    • Authorization notes

    • A pre-list

    • Control totals

    Correct Answer(s)
    A. A pre-list
    A. Control totals
    Explanation
    Ben is responsible for conducting internal checks and preparing a pre-list and control totals as part of his role. A pre-list is a list of items or tasks that need to be completed or checked, which helps in organizing and prioritizing the work. Control totals are the sum or total of a set of numbers or values, which are used to ensure accuracy and completeness in financial or operational processes. By preparing these two, Ben can effectively manage and monitor the internal checks and ensure that all necessary tasks are completed accurately.

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  • 11. 

    Bob purchases 20% of Company A’s output. Company A is only one of many companies who supply Bob. Bob always maintains a degree of competition between suppliers. As far as Company A is concerned, how should Bob be categorized under Mendelow’s framework?

    • Low power, high interest

    • High power, low interest

    • Low power, low interest

    • High power, high interest

    Correct Answer
    A. Low power, high interest
    Explanation
    Based on the given information, Bob purchases only 20% of Company A's output and maintains competition between suppliers. This suggests that Bob does not have a high level of power over Company A. However, Bob's high interest in Company A's output indicates that he is highly interested in the success and performance of the company. Therefore, Bob should be categorized as having low power but high interest according to Mendelow's framework.

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  • 12. 

    Jim works for the internal audit department of KL Co. Recently he was asked to examine the polices of the purchasing department, and to report to management whether the polices were adequate and were working effectively. What type of audit has Jim been asked to perform

    • Operational audit

    • Transactions audit

    • Value for Money audit

    • Systems audit

    Correct Answer
    A. Operational audit
    Explanation
    Jim has been asked to perform an operational audit. This type of audit focuses on evaluating the effectiveness and efficiency of an organization's operations, including its policies and procedures. In this case, Jim is specifically examining the policies of the purchasing department to determine if they are adequate and working effectively. This type of audit helps management identify areas for improvement and make informed decisions to enhance the overall performance of the organization.

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  • 13. 

    Which of the following frauds is an example of intentional misrepresentation rather than removal of funds?

    • Payroll fraud

    • Teeming and lading

    • Fictitious sales

    • Collusion with customers

    Correct Answer
    A. Fictitious sales
    Explanation
    Fictitious sales involve deliberately creating false sales transactions in order to deceive others. This type of fraud is an intentional misrepresentation because it involves intentionally presenting false information about sales that did not actually occur. It is different from the removal of funds, where the focus is on stealing or embezzling money directly. In fictitious sales, the aim is to deceive others by making them believe that sales have taken place, resulting in financial gain or other benefits for the fraudster.

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  • 14. 

    Ahsan is a director of HH Co. and has been asked to oversee the development of a new business system. The objective of the system will be providing reasonable assurance about the reliability of financial reporting. What type of system is being developed?

    • An information system

    • An internal audit system

    • An internal control system

    • A financial accounting systems

    Correct Answer
    A. An internal control system
    Explanation
    The type of system being developed is an internal control system. An internal control system is designed to provide reasonable assurance about the reliability of financial reporting. It includes policies, procedures, and processes that are put in place to safeguard company assets, ensure accuracy and completeness of financial records, and promote compliance with laws and regulations. As a director of HH Co., Ahsan's role in overseeing the development of this system would involve implementing controls and monitoring their effectiveness to ensure the reliability of financial reporting.

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  • 15. 

    Which of the following describes the ‘country club’ style of management identified by Blake and Mouton’s managerial grid

    • Follows the traditions of scientific management

    • A high degree of concern for production and for people

    • Little concern for people and little concern for the task

    • Encourages and supports and overlooks inadequacies

    Correct Answer
    A. Encourages and supports and overlooks inadequacies
    Explanation
    The 'country club' style of management identified by Blake and Mouton's managerial grid is characterized by a high degree of concern for people and little concern for the task. This style of management emphasizes creating a comfortable and friendly work environment, where the needs and well-being of employees are prioritized over achieving high levels of productivity. Managers who adopt this style tend to be more lenient and forgiving, often overlooking inadequacies and providing support and encouragement to their team members.

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  • 16. 

    ABC Co. manufactures ladies clothes. Fabric is purchased from approved suppliers and then clothes are produced to customers (retailer’s) order. Which TWO of the following would be application controls in ABC CO’s purchasing system?

    • Orders over Rs. 10,000 in value are authorized by an executive

    • Passwords are required to log only the computer system

    • Sequence checks are made as documents are entered into the system

    • Exception reports are produced showing employees working more than 50 hours per week

    Correct Answer(s)
    A. Orders over Rs. 10,000 in value are authorized by an executive
    A. Sequence checks are made as documents are entered into the system
    Explanation
    The first application control, "Orders over Rs. 10,000 in value are authorized by an executive," ensures that high-value orders are approved by a higher-level authority, reducing the risk of unauthorized purchases or fraud. The second application control, "Sequence checks are made as documents are entered into the system," ensures that all documents are entered in the correct order, preventing any missing or duplicate entries that could lead to errors or discrepancies in the purchasing process.

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  • 17. 

    Andrea is the internal auditor at Hitec Properties Company. Philip, from JEC and Partners, has been appointed as the external auditor. Which TWO of the following would Philip consider when assessing Andrea’s work?

    • Limitation of risk

    • Errors and ommission

    • Due professional care

    • Technical competence

    Correct Answer(s)
    A. Due professional care
    A. Technical competence
    Explanation
    Philip, as the external auditor, would consider due professional care and technical competence when assessing Andrea's work. Due professional care refers to the level of skill, diligence, and care that a reasonable auditor would exercise in similar circumstances. Philip would assess whether Andrea has performed her duties with the required level of care and professionalism. Technical competence, on the other hand, refers to the auditor's knowledge and understanding of auditing principles and techniques. Philip would assess whether Andrea possesses the necessary technical skills and expertise to perform her role effectively.

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  • 18. 

     ‘Getting things done through other people ‘ BEST defines which of the following?

    • Leadership

    • Mentoring

    • Delegation

    • Supervision

    Correct Answer
    A. Supervision
    Explanation
    Supervision is the best definition for "getting things done through other people" because it involves overseeing and directing the work of others to ensure tasks are completed effectively and efficiently. Supervisors provide guidance, support, and instructions to their subordinates, ensuring that work is carried out according to established standards and goals. They have the authority to make decisions, allocate resources, and hold individuals accountable for their performance. Supervision is a key aspect of management and requires strong communication, interpersonal, and organizational skills to effectively coordinate and motivate a team towards achieving objectives.

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  • 19. 

    Danny is the accounts manager in a company trading in legitimate activity, established by a person to receive funds acquired by the same person from illegal sources. The person who manages but does not own the legitimate company may be guilty of which TWO categories of money laundering?

    • Concealing or transferring proceeds to avoid prosecution

    • Acquisition, possession or use of criminal proceeds

    • Assisting another to retain the benefit of crime

    • Failure to disclose knowledge or suspicion of money laundering

    Correct Answer(s)
    A. Assisting another to retain the benefit of crime
    A. Failure to disclose knowledge or suspicion of money laundering
    Explanation
    Danny, as the accounts manager, is assisting the person who established the legitimate company to retain the benefit of their illegal activities. This falls under the category of "Assisting another to retain the benefit of crime." Additionally, if Danny is aware or has suspicions about the illegal source of funds but fails to disclose this knowledge, he is also guilty of "Failure to disclose knowledge or suspicion of money laundering."

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  • 20. 

    David, an internal auditor, has been asked to assess the internal factors  that may increase his company’s risk exposure to fraud.   Which TWO of the following are relevant to this assessment?

    • Corporate restructuring

    • New legislation

    • Rapid growth

    • Increased competition

    Correct Answer(s)
    A. Corporate restructuring
    A. Rapid growth
    Explanation
    Corporate restructuring and rapid growth are relevant to assessing the internal factors that may increase a company's risk exposure to fraud. Corporate restructuring can lead to changes in processes, systems, and controls, which may create vulnerabilities that can be exploited for fraudulent activities. Rapid growth can also increase the risk of fraud as it may strain resources, create a need for quick decision-making, and result in inadequate oversight and controls. New legislation and increased competition may have an impact on fraud risk, but they are external factors rather than internal factors.

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  • 21. 

     the external auditor appointed to review SFGD Co’s financial statements, has detected a misstatement in the year end accounts. Ed is required to do which TWO of the following?

    • Detect the extent of fraud and error in the organization

    • Document his findings and report them to management

    • Express an opinion on the true and fair view of the financial statement

    • Ensure that the company’s assets are safeguarded

    Correct Answer(s)
    A. Detect the extent of fraud and error in the organization
    A. Express an opinion on the true and fair view of the financial statement
    Explanation
    Ed, as the external auditor, is required to detect the extent of fraud and error in the organization. This is an important responsibility of an auditor to identify any fraudulent activities or errors that may have occurred in the financial statements. Additionally, Ed is also required to express an opinion on the true and fair view of the financial statement. This means that he needs to assess the accuracy and reliability of the financial statements and provide an opinion on whether they present a true and fair view of the company's financial position.

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  • 22. 

    Which TWO of the following are characteristics of a shaper within Belbin’s team roles?

    • Well organized and predictable

    • More interested in ideas than achievement

    • Challenges other to move forward

    • Can be insensitive aggressive and cause conflict

    Correct Answer(s)
    A. Challenges other to move forward
    A. Can be insensitive aggressive and cause conflict
    Explanation
    A shaper within Belbin's team roles is someone who challenges others to move forward and can be insensitive, aggressive, and cause conflict. This team role is known for pushing the team to achieve their goals and can sometimes be confrontational in their approach. Their focus is on driving progress and may not be as interested in ideas as they are in achieving results. They may exhibit behavior that can be seen as aggressive or conflict-inducing, but this is often necessary to push the team towards success.

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  • 23. 

    External auditors report on the year end accounts and verify whether they are completely accurate

    • True

    • False

    Correct Answer
    A. False
    Explanation
    External auditors do not verify whether the year-end accounts are completely accurate. Their main objective is to provide an independent and objective assessment of the financial statements to ensure they are presented fairly and in accordance with the applicable financial reporting standards. While auditors perform various tests and procedures to obtain reasonable assurance about the accuracy of the financial statements, they do not guarantee their complete accuracy.

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  • 24. 

    Anna is a newly appointed auditors in a manufacturing company. She discovers that the person who orders raw materials is also responsible for receiving them and authorizing payment for them. Anna considers this a violation of a fundamental people of financial administration and determines to implement a system whereby no one person can be responsible for all of these activities. Which of the following BEST describes what Anna wishes to implement

    • Financial regulation

    • Internal Check

    • System Control

    • Internal Control

    Correct Answer
    A. Internal Check
    Explanation
    Anna wishes to implement an Internal Check system. Internal Check refers to the process of dividing responsibilities and duties among different individuals to prevent fraud and errors. By ensuring that no one person is responsible for ordering raw materials, receiving them, and authorizing payment, Anna aims to establish a system of checks and balances within the company's financial administration. This will help in detecting and preventing any potential misuse of resources and ensure the accuracy and reliability of financial transactions.

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    Quiz Created by
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