CPA AUD Fraud, Specialists & Specific Risk Areas Practice Questions
Fraud, Specialists & Specific Risk Areas makes up 5 of every 50 questions on a Tigertest CPA AUD practice test. Here are 10 of the 20 questions on it, each with the answer and the reason.
Updated by the Tigertest team. Based on the AICPA's 2026 AUD blueprint. Original multiple-choice questions; simulations not included. Not affiliated with the AICPA, NASBA or the PCAOB.
1. Under AU-C 240, which fraud risk is presumed in every audit and may be rebutted?
- A.Kickbacks paid to purchasing staff
- B.Improper revenue recognition
- C.Theft of petty cash funds
- D.Payroll fraud by supervisors
Answer: B. The auditor presumes a fraud risk in revenue recognition. If it is rebutted, the reasons are documented. Management override is the risk that cannot be rebutted.
2. Because management override of controls is a risk in every audit, the auditor must:
- A.Count all inventory
- B.Test every control
- C.Confirm all receivables
- D.Test journal entries
Answer: D. Responses to management override include testing journal entries and other adjustments, reviewing estimates for bias and evaluating the business rationale for significant unusual transactions.
3. In the fraud triangle, a sales manager whose bonus depends on hitting a quarterly target illustrates:
- A.Incentive
- B.Capability
- C.Opportunity
- D.Rationalization
Answer: A. The three conditions are incentive or pressure, opportunity, and attitude or rationalization. A bonus tied to a target is an incentive. Capability belongs to the later fraud diamond, not the triangle.
4. Weak controls over cash receipts in a small office, where one clerk handles the mail and the deposits, illustrate which fraud condition?
- A.Rationalization
- B.Pressure
- C.Opportunity
- D.Incentive
Answer: C. Opportunity exists when controls are absent or ineffective, as when one person handles both the receipt and the recording of cash.
5. When testing journal entries for fraud, which entry is most suspicious?
- A.Automated payroll postings
- B.System-generated sales entries
- C.Round sums posted after year-end
- D.Recurring monthly depreciation entries
Answer: C. Entries made at the end of a period or after close, with round numbers, little explanation or to seldom-used accounts carry higher fraud risk.
6. The auditor identifies a misstatement that results from fraud by a junior clerk and is not material. The auditor should:
- A.Tell an appropriate level of management
- B.Report it to the police first
- C.Withdraw from the engagement immediately
- D.Ignore it, as it is immaterial
Answer: A. Evidence of fraud, even immaterial, is brought to the attention of an appropriate level of management, at least one level above those involved.
7. Under AU-C 250, laws such as tax and pension laws that directly affect amounts in the statements require the auditor to:
- A.Report each law to the SEC
- B.Perform no specific work
- C.Rely on management only
- D.Obtain evidence of compliance
Answer: D. For laws with a direct effect on material amounts and disclosures, the auditor obtains sufficient appropriate evidence of compliance. For other laws, procedures are limited to identifying noncompliance.
8. When auditing an accounting estimate, which approach is acceptable under SAS 143?
- A.Asking the client's banker
- B.Developing an auditor's range
- C.Accepting management's figure
- D.Using last year's estimate
Answer: B. SAS 143 allows testing how management made the estimate, developing an auditor's point estimate or range, or using events up to the report date.
9. A retrospective review of last year's estimates against actual outcomes is mainly performed to look for:
- A.IT access issues
- B.Management bias
- C.Sampling error
- D.Cutoff errors
Answer: B. Comparing prior estimates with their outcomes helps the auditor detect a pattern of management bias and judge the reliability of the current process.
10. Which procedure is most likely to uncover related party transactions not disclosed by management?
- A.Recomputing depreciation
- B.Observing inventory
- C.Confirming receivables
- D.Reading board minutes
Answer: D. Minutes, contracts, bank confirmations of guarantees and large unusual transactions often reveal related parties management has not identified.
Practice all 20 fraud, specialists & specific risk areas questions, and the rest of the 200-question bank, in the free CPA AUD training sets. Questions you miss come back until you have mastered them.
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