. Discuss the auditor’s responsibility for detecting fraud,
including fraudulent financial reporting and misappropriation of
assets. Is there any sign that should alert the auditor to
potential fraud?
1- Auditors are required to actively conduct a financial
statement audit with the mindset that fraud may exist. What is the
general process that an auditor goes through to assess the risk of
fraud and test accordingly?
2- A client seeking to recover damages from an auditor for
breach of contract in an action based on negligence must show that
the auditor had a duty not to be negligent. Identify at least three
defenses an auditor can use against a...
Assessing the risk of fraud in a financial statement audit is a
difficult audit judgment. Auditing standards require the auditor to
perform several audit procedures to accumulate information to
assess the risk of fraud. You are the in-charge auditor responsible
for planning the financial statement audit of Spencer, Inc. Two new
staff auditors are assisting you with the initial audit planning
and have asked you the questions below. Please summarize your
responses to these staff auditor questions:
a. What is...
1. Explain that auditor’s public interest responsibility
including the source of their responsibility they extends to which
they embrace this responsibility & tangible ways that
entry-level auditors can embrace this responsibility?
2. Explain the concept of professional skepticism including its
underlying attributes and in addition to describing the different
approaches to professional skepticism and how they are used in
audit?
3. Applied question(use example):1. Use of example of testing
revenue explain the steps and performance of standard analytical
produces 2....
The audit assistant has been assigned to review performance indicators in the purchasing department of Kentucky Kapers, a manufacturing audit client. The assistant reports to you that he has obtained a copy of reports used by the supervisor in the purchasing department to assess the performance of the purchasing team. The reports include details of orders processed each day, any backlog of orders and the time taken to clear the backlog each week, and overtime requests by staff in the...
Fraud in Financial Statements and Auditor Responsibilities
According to the AICPA audit standard on fraud,
Consideration of Fraud in a Financial Statement Audit
(AU-C Section 240), the primary responsibility for the prevention
and detection of fraud rests with both those charged with
governance of the entity and management. A strong emphasis should
be placed on fraud prevention, which may reduce opportunities for
fraud to take place, and fraud deterrence, which could persuade
individuals not to commit fraud because of the...