Chapter _3 Fraud and Illegal Acts.doc

Chapter _3 Fraud and Illegal Acts.doc - Audit...

Info iconThis preview shows pages 1–5. Sign up to view the full content.

View Full Document Right Arrow Icon
Audit Responsibilities Related to Fraud Basic responsibility -- must plan the audit to provide ‘reasonable assurance’ of detecting material misstatements (specifically, must now assess the risk of material misstatement due to fraud) Professional standards identify 2 types of F/S- related fraud (must consider ‘risk factors’) From fraudulent financial reporting From misappropriation of assets
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Basic Responsibilities (Continued) Required documentation -- must document the assessment of the risk of material fraud (and the implications of any identified ‘risk factors’) and the discussion with “key” audit team members Required communications Must inform the audit committee when senior management is involved or when the misstatement is material ; Must inform the appropriate level of management when fraud is not material
Background image of page 2
Risk Factors Related to Fraudulent Reporting -- Examples Related to incentives/pressures Financial stability/profitability is threatened by economic conditions: e.g., operating losses threaten bankruptcy; recurring negative cash flows from operations; vulnerability to rapid changes due to technology or other factors; increasing business failures in the industry; unusual profitability relative to the industry
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Risk Factors Related to Fraudulent Reporting -- Examples Related to incentives/pressures Excessive pressure to meet the expectations
Background image of page 4
Image of page 5
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 04/22/2011 for the course ACCY 360 taught by Professor T during the Spring '08 term at Northern Illinois University.

Page1 / 15

Chapter _3 Fraud and Illegal Acts.doc - Audit...

This preview shows document pages 1 - 5. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online