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Audit Fraud & error p7

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Audit Fraud & error p7

  1. 1. Fraud v Error
  2. 2. Fraud v Error Intentional
  3. 3. Fraud v ErrorIntentional
  4. 4. Fraud v ErrorIntentional Misinterpretation
  5. 5. Fraud v ErrorIntentional Misinterpretation
  6. 6. Fraud v ErrorIntentional Misinterpretation Incorrect Accounting
  7. 7. Fraud v ErrorIntentional Misinterpretation Incorrect Accounting
  8. 8. Fraud v Error Intentional Misinterpretation Incorrect AccountingThere may be requirements to report suspicions of fraud, but not error
  9. 9. Management v Auditor
  10. 10. Management v Auditor Prepare T&F
  11. 11. Management v AuditorPrepare T&F
  12. 12. Management v AuditorPrepare T&F Prevent & Detect Fraud
  13. 13. Management v AuditorPrepare T&F Prevent & Detect Fraud
  14. 14. Management v AuditorPrepare T&F Prevent & Detect Fraud Internal Controls
  15. 15. Management v AuditorPrepare T&F Prevent & Detect Fraud Internal Controls Good Corporate Governance
  16. 16. Management v Auditor
  17. 17. Management v Auditor Report on T&F
  18. 18. Management v Auditor Report on T&F
  19. 19. Management v Auditor Report on T&FReasonable Assurance Fraud & ERROR
  20. 20. Management v Auditor Report on T&F Reasonable Assurance Fraud & ERROR
  21. 21. Management v Auditor Report on T&F Reasonable Assurance Fraud & ERRORPrimary F&E responsibility lies with management
  22. 22. Management v Auditor Report on T&F Reasonable Assurance Fraud & ERROR Primary F&E responsibility lies with managementconsider the risk of material misstatement
  23. 23. Management v Auditor
  24. 24. Management v Auditor Reduce fraud opportunities
  25. 25. Management v Auditor Reduce fraud opportunities Establish a culture where no fraud
  26. 26. Management v Auditor Reduce fraud opportunities Establish a culture where no fraud due to the likelihood of detection
  27. 27. Professional Scepticism
  28. 28. Professional ScepticismDiscuss fraud within specific characteristics of the audit & potential effect on FS
  29. 29. Professional ScepticismDiscuss fraud within specific characteristics of the audit & potential effect on FS
  30. 30. Professional ScepticismDiscuss fraud within specific characteristics of the audit & potential effect on FSTalk to management about controls to detect or prevent fraud
  31. 31. Professional ScepticismDiscuss fraud within specific characteristics of the audit & potential effect on FSTalk to management about controls to detect or prevent fraudObtain evidence that fraud has not occurred or detected and corrected
  32. 32. Fraud/Error is Suspected?
  33. 33. Fraud/Error is Suspected?
  34. 34. Fraud/Error is Suspected? Effect on FS?
  35. 35. Fraud/Error is Suspected? Effect on FS?
  36. 36. Fraud/Error is Suspected? Effect on FS? Document in Audit files
  37. 37. Fraud/Error is Suspected? Effect on FS? Document in Audit files
  38. 38. Fraud/Error is Suspected? Effect on FS? Additional Document in Testing? Audit files
  39. 39. Fraud/Error is Suspected? Effect on FS? Extent of misstatement Additional Document in Testing? Audit files
  40. 40. Fraud/Error is Suspected? Effect on FS? Extent of misstatement Additional Document in Testing? Audit files
  41. 41. Fraud/Error is Suspected? Effect on FS? Extent of misstatement Effect on Additional Document in Risk? Testing? Audit files
  42. 42. Fraud/Error is Suspected? Effect on FS? Extent of misstatement Effect on Additional Document in Risk? Testing? Audit files
  43. 43. Fraud/Error is Suspected? Effect on FS? Extent of misstatement Effect on Additional Document in Risk? Testing? Audit filesDiscuss withManagement
  44. 44. Fraud/Error is Suspected? Effect on FS? Extent of misstatement Effect on Additional Document in Risk? Testing? Audit filesDiscuss withManagementTell them to get legaladvice if fraud is suspected
  45. 45. Fraud/Error is Suspected? Effect on FS? Extent of misstatement Effect on Additional Document in Risk? Testing? Audit filesDiscuss withManagementTell them to get legaladvice if fraud is suspected
  46. 46. Fraud/Error is Suspected? Effect on FS? Extent of misstatement Effect on Additional Document in Risk? Testing? Audit filesDiscuss with If ManagementManagementTell them to get Suspected? legaladvice if fraud is suspected
  47. 47. Fraud/Error is Suspected? Effect on FS? Extent of misstatement Effect on Additional Document in Risk? Testing? Audit filesDiscuss with If ManagementManagementTell them to get Suspected? legal Get legal advice or rarely resignadvice if fraud is suspected
  48. 48. Fraud/Error is Suspected? Effect on FS? Extent of misstatement Effect on Additional Document in Risk? Testing? Audit filesDiscuss with If ManagementManagementTell them to get Suspected? legal Get legal advice or rarely resignadvice if fraud is suspected
  49. 49. Fraud/Error is Suspected? Effect on FS? Extent of misstatement Effect on Additional Document in Risk? Testing? Audit files ConsiderDiscuss with If Management ReportManagementTell them to get Suspected? Impact legal Get legal advice or rarely resignadvice if fraud is suspected
  50. 50. Fraud/Error is Suspected? Effect on FS? Extent of misstatement Effect on Additional Document in Risk? Testing? Audit files ConsiderDiscuss with If Management ReportManagementTell them to get Suspected? Impact legal Get legal advice or rarely resignadvice if fraud is suspected
  51. 51. Fraud/Error is Suspected? Effect on FS? Extent of misstatement Effect on Additional Document in Risk? Testing? Audit files ConsiderDiscuss with If Management ReportManagementTell them to get Suspected? Impact legal Get legal advice or rarely resignadvice if fraud is suspected Report to Authorities?
  52. 52. Fraud/Error is Suspected? Effect on FS? Extent of misstatement Effect on Additional Document in Risk? Testing? Audit files ConsiderDiscuss with If Management ReportManagementTell them to get Suspected? Impact legal Get legal advice or rarely resignadvice if fraud is suspected Report to Authorities? Consider Confidentiality
  53. 53. The Auditor - Criminal Liability
  54. 54. The Auditor - Criminal LiabilityAccepting appointment without being qualified
  55. 55. The Auditor - Criminal LiabilityAccepting appointment without being qualified Being involved with fraud
  56. 56. The Auditor - Criminal LiabilityAccepting appointment without being qualified Being involved with fraud Insider Dealing
  57. 57. The Auditor - Criminal LiabilityAccepting appointment without being qualified Being involved with fraud Insider Dealing Money Laundering
  58. 58. The Auditor - Civil Liability
  59. 59. The Auditor - Civil Liability Negligent (careless) auditing
  60. 60. The Auditor - Civil Liability Negligent (careless) auditingSued by Client company under contract law
  61. 61. The Auditor - Civil Liability Negligent (careless) auditingSued by Client company under contract law Sued by banks etc under negligence
  62. 62. The Auditor - Duty of skill & Care
  63. 63. The Auditor - Duty of skill & Care Depends on the circumstance
  64. 64. The Auditor - Duty of skill & Care Depends on the circumstanceeg. Accepting the word of management after suspicion is aroused
  65. 65. The Auditor - Duty of skill & Care Depends on the circumstanceeg. Accepting the word of management after suspicion is aroused Follow ISAs and show this in working papers
  66. 66. The Auditor - Professional competence
  67. 67. The Auditor - Professional competenceAchieve, and maintain, professional knowledge
  68. 68. The Auditor - Professional competence Achieve, and maintain, professional knowledgeeg. Formal & Informal training + experience
  69. 69. The Auditor - Professional competence Achieve, and maintain, professional knowledgeeg. Formal & Informal training + experience Awareness of general business developments, such as dropbox and e-commerce
  70. 70. The Auditor - Due care
  71. 71. The Auditor - Due careActing diligently in accordance with technical and professional standards
  72. 72. The Auditor - Due care Acting diligently in accordance with technical and professional standardsmeans applying knowledge minimising the chance of mistakes being made
  73. 73. The Auditor - Due care Acting diligently in accordance with technical and professional standardsmeans applying knowledge minimising the chance of mistakes being made Enough time to complete work with due care Staff fully understand the objectives
  74. 74. The Auditor - Negligence - A Civil Wrong
  75. 75. The Auditor - Negligence - A Civil Wrong Duty of Care
  76. 76. The Auditor - Negligence - A Civil Wrong Duty of Care Duty is broken
  77. 77. The Auditor - Negligence - A Civil Wrong Duty of Care Duty is broken Damage results
  78. 78. The Auditor - Negligence - A Civil Wrong Duty of Care Duty is broken Damage resultsThe auditor does not exist to aid investment decisions, unless verbal assurances given
  79. 79. Fraudulent Financial Reporting
  80. 80. Fraudulent Financial Reporting IntentionalMisstatement!
  81. 81. Fraudulent Financial Reporting
  82. 82. Fraudulent Financial Reporting Manipulation
  83. 83. Fraudulent Financial Reporting Manipulation Misrepresentation
  84. 84. Fraudulent Financial Reporting Manipulation Misrepresentation Misapplication
  85. 85. Fraudulent Financial Reporting Manipulation Misrepresentation Misapplication Earnings Management

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