They probably ran into similar issues when they were

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They probably ran into similar issues when they were preparing the internal audit and reviewing statements. Wqseem: Before you start implying that you think the company is a fake, remember that Saul and the store manager are both on the committee. There might be five other people in the meetings, but Saul and the store manager have the most power in the group. They're the only ones who are closely checking the books. Yosef:I think that if we present the material to the group, it might feel less confrontational. Also, we could ask for a meeting with the accountants of the other company, as well as a copy of the company's invoices. That way, we could be absolutely sure it's just a matter of a few discrepancies and misstatements. Waseem: If you cause a stir, I'm sure Saul and the other committee members will agree to cooperate and get us the necessary information. But they might not choose our firm for next year's audit, and the company seems to be doing well. We want to keep our clients happy. Yosef:I think the integrity of our company should be equally important, though. Besides, the employees of the company have a right to know if something is amiss at work. Wqseem: Business is booming right now, so the employees would probably be irritated that you're trying to frame their employer for fraud. Yosef: r know, but if this continues, they're the ones who will end up hurt by any repercussions of the theft. Remember, they have stock and an interest in the company, too. I think they have a right to know of this, even if it ends up being nothing. a. Describe the fraud risk factors that are indicated in the dialogue above. Required b. Describe Waseem's misconceptions regarding the consideration of fraud in the audit of Gilgamesh's financial statements that are contained in the preceding dialogue, and explain why each is a misconception. c. Describe an auditor's audit documentation requirements regarding the assessment *.*****;:,::,::'::,:"::.:,:*i*::::::_1'**:".:_:1:*s!F*@ffi*[email protected]&ffi***ffiisffi**;@fai*mffiE:K*w INTEGRATED CASE APPTICATION - PINNACLE MANUFACTURING: PART IV ll-3a (objectives l1-2, lr-3) In Parts I (pp. 263*265) and II (pp. 305-306) of this case you performed preliminary analytical procedures and assessed acceptable audit risk and inherent risk for Pinnacle Manufacturing. In Part iII (pp.350-352) of the case, you obtained an understanding of internal control and assessed control risk for acquisition and cash disbursement transactions. The auditor also assesses fraud risk as part of risk assessment procedures performed during audit planning. You have been invited by the audit partner on the Pinnacle engagement to participate in the fraud brainstorming session conducted as part of audit Chapter I I / CONSIDERINC THE RISK OF FRAUD 387
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planning. The purpose of Part IV is to identif, fraud risks and the response to these fraud risks in the audit of Pinnacle Manufacturing.
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