Académique Documents
Professionnel Documents
Culture Documents
Errors Fraud
Fraudulent Misappropriation
Financial of Assets
Reporting
Two Types of Fraud Considered in
an Audit
• Fraudulent financial reporting (“cooking
the books”)--examples
– Falsification of accounting records
– Omissions of transactions
• Misappropriation of assets--examples:
– Theft of assets
– Fraudulent expenditures
Professional Skepticism
• An attitude that includes a questioning mind and
a critical assessment of audit evidence
Risk of material
misstatement = Risk of fraud
due to fraud
Fraud Conditions (“Fraud Triangle”)
Incentive
(Pressure)
Opportunity Rationalization
(Attitude)
Steps involved in Considering the
Risk of Fraud
1. Staff discussion
2. Obtain information needed to identify risks
3. Identify risks
4. Assess identified risks
5. Respond to results of assessment
6. Evaluate audit evidence
7. Communicate about fraud
8. Document consideration of fraud
Step 1—Staff Discussion of the
Risk of Fraud
• Brainstorm
• Likelihood of Risk
• Pervasiveness of risk
Step 4—Assess the identified risks
after considering programs and
controls
• Consider understanding of internal control
– Accounting estimates