Transcript Journal of Accountanty

Journal of Accountanty
Auditor’s Responsibility
For Fraud Detection
David
Briefly, very briefly, without looking at the
article, what does this article discuss?
Kevin
What is the first topic addressed in the article?
AU 316 does define Professional Skepticism ---- Hint
Tori
What NEW REQUIREMENT does SAS 99
introduce?
Who has read AU 316
AU 316 specifies one individual who must
participate in the “brainstorming” meeting. Who
is that individual?
The auditor with final responsibility for the audit
Elizabeth
When we discuss the audit client’s control
environment, we talk about the “tone at the
top.” SAS 99 discusses “tone at the top” in a
different context.
How does SAS 99 discuss “tone at the top?”
Sarah
What is the primary objective of the
“brainstorming” session?
So the engagement team will have a good understanding of
information that seasoned team members have about their
experiences with the client how a fraud might be perpetrated
and concealed
Jane
When is this “brainstorming” session or sessions
required to occur?
When might an additional “brainstorming”
session be held?
Stephen
What are the 3 elements of the “fraud triangle?”
Bridget
Is it necessary for all 3 elements to be present in
order for fraud to occur?
Julian
SAS 99 states auditors should obtain information
to identify the risks of fraud form Management
and others within the organization.
Discuss 2 groups of people who might fall under
“others within the organization.”
Carissa
The section is titled OBTAIN INFORMATION TO
IDENTIFY THE RISKS OF FRAUD.
Discuss the difference between obtaining
information to identify the risks of fraud and the
assessment of the Risk of Material Misstatement
due to fraud.
Nick
If you are making inquiries of someone in
operations who has little of no knowledge of
accounting, what is the nature of the
information you are seeking?
How does asking the same, or similar, question
of different people provide evidence?
What is a Fraud Risk Factor?
An event or condition that tracks the three
conditions of the fraud triangle
Does the presence of a “fraud risk factor”
indicate there is a fraud?
The following section headings are from AU 316
• OBTAINING THE INFORMATION NEEDED TO IDENTIFY RISKS OF MATERIAL
MISSTATEMENT DUE TO FRAUD.
• IDENTIFYING RISKS THAT MAY RESULT IN A MATERIAL MISSTATEMENT DUE
TO FRAUD.
• ASSESSING THE IDENTIFIED RISKS AFTER TAKING INTO ACCOUNT AN
EVALUATION OF THE ENTITY’S PROGRAMS AND CONTROLS.
With regard to the 2nd and 3rd bullets, how does the article
suggest we think of “assessment.”
Because the nature of fraud is very different
than the nature of unintentional misstatements,
the author suggest we must think of assessment
differently.
Back in our auditing class, how did we use
“assessment” when evaluating the effectiveness
of internal controls due to errors?
What does the author suggest the goal of
assessment should be when discussing fraud?
To synthesize the identified risks to determine where the entity
is most vulnerable to material misstatement due to fraud, the
types of fraud that are most likely to occur and how those
material misstatements are likely to be concealed.
SAS 99 requires auditors to assess the Risk of
Material Misstatement (RoMM) due to fraud at
three levels. What are those three levels.
For what type of fraudulent financial reporting
scheme does SAS 99 presume there a risk of
fraud?
What does it imply about a company if they do
not have programs and controls in place to
assess and mitigate the risk of fraud.
Discuss how management’s selection and
application of accounting principles might be a
factor in your identification of risks.
Describe / discuss nonstandard journal entries.
What is the goal of Retrospectively Reviewing
Accounting Estimates?
Describe / discuss Significant Unusual
Transactions?
Very late in the audit you become aware that
the controller or CFO has fraudulently
overstated travel expenses for reimbursement.
The amount is totally insignificant to the
financial statements. What effect will this have
on your audit?
Documentation, documentation, documentation