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Flashcards in Fraud Risk Deck (22):
1

What are unintentional misstatements or omissions?

Error

2

What is an intentional act by one or more individuals?

Fraud

3

What are the 3 types of fraud?

Fraudulent financial reporting, misappropriation of assets, and corruption

4

What involves intentional misstatements or omissions of amounts or disclosures in the financial statements that are designed to deceive financial statement users?

Fraudulent financial reporting

5

What involves theft of an entity's assets?

Misappropriation of assets

6

What are the 3 fraud risk factors?

Incentives/Pressures, opportunity, and rationalization

7

What is a discussion topic among Engagement Personnel?

Consideration of the risk of management override of controls

8

What are the procedures used to obtain information useful in identifyying potential fraud risks?

Inquire of entity personnel regarding their views of fraud risk, consider the results of analytical procedures, and evaluate fraud risk factors

9

When is analytical procedures required during?

Planning and final review stage

10

Does lack of observation of any or all of the three fraud risk factors imply that there is no fraud risk?

No

11

What are the 4 attributes of risk?

Type, significance, likelihood, and pervasiveness

12

There is a presumption in every audit that what two risks exist?

Improper revenue recognition and management override of controls

13

What are the other 2 considerations for identifying risks?

Size, complexity, and ownership characteristics of the entity and susceptibillity of items to manipulation

14

The auditor is required to respons to the results of the fraud risk assessment on what 3 levels?

Overall General response, response encompassing specific audit procedures, and response addressing risks related to management override

15

The auditor should consider the overall fraud risk when?

Assigning personnel to the engagement, supervision, management's selection and application of accounting principles, and unpredictability in the selection of auditing procedures

16

The following procedures should be performed to address the risk of management override of controls?

Examine journal entries and other adjustments, review accounting estimates for biases, and evaluate the business purpose for significant unusual transactions

17

What are conditions identified during fieldwork that may affect the assessment of fraud risk?

Discrepancies in the accounting records, conflicting or missing evidential matter, problematic relationships between the auditor and management, objections by management to the auditor meeting privately with the audit committee, accounting policies that appear inconsistent with industry practices, frequent changes in accounting estimates, and tolerance of violations of the company's code of conduct

18

Who should the auditor discuss fraud that causes a material misstatement of the financial statements with?

Senior management and reported directly to those charged with governance

19

Who should the auditor discuss fraud involving senior management with?

Those charged with governance

20

A duty disclose fraud outside the entity exist?

To comply with certain legal and regulatory requirements, to a successor auditor, response to a subpoena, a funding agency or other specified agency in accordance with requirements for receiving governmental financial assistance, and to authorities

21

Is complete documentation of the auditor's risk assessment and response required?

Yes

22

Does an auditor need documentation for not identifying improper revenue recognition as a fraud risk?

Yes