The Auditors need to be very cautious while auditing a firm where risk of management fraud is very high. Before starting the actual audit , the audtors need to assess the following status regarding the corporate governance of the company; 1. Whether there is an effective Audit Committee having independent Directors and at least one Financial expert is working. Whether the Audit committee works independently and challenges management views if required? Whether the Auditors report directly to Audit committee without any interference from Management? Does the Audit committee understand well the business and its environment and riskd? 2. Whether the internal Audit of the company is opeartional and give its suggestions independently? 3. Whether there is strong whistleblower policy and protection for whistleblowers ? Has anything in the recent pat been reported by whistleblowers? After assessing the coroprate Governance status of the company , the Auditors need to assess the fraud risks associated with the business. The Auditors must assess various finance processes for risk from the input providers, from system or ERP, from output and storage of data and risks from lapse in approval system or risks from ineffective segregation of duty. According to the risk assessment, Auditors need to chalk out the Audit paln and do extended audit if required in the vulnerable areas. Senior partners and associates must be deployed in such audits to avoid any lapse due to inexperience in auditing. While doing the actual audit, the following points may be specifically checked; 1. Whether there is frequest and unreasonable change in Accounting Principles and estimates, 2. Whether any loans or advances made to employees or Directors, 3. Whether any asset or liability that is directly related to comapny has been shown as asset & liability of any special purpose entity (SPE) and no detailed disclosure made about that. 4. Whether some crucial disclosures are made an a masked and incorrect manner. 5. Whether any incorrect/inflated/deflated revenue or expense recorded and approved by management. 6. Whether any fraudulane payment/receipt/debit or credit note payment or receipt has been recoreded and approved by management? 7. Whether bad debt or other provision amounts are not based on realistic calculation and twisted as per management advice? 8. Whether bank transactions are properly done and rconciliations are matched with bank statementa and whether bank deposit receipts are cross tallied with bank physically? 9. Whether master data related to vendor and cutsomer master creation, manitaning the rates and discount rates , vendor and customer bank details etc are manitained by authorised persons have specific access and are properly authorised? The master data change trails need to be carefully audited. These are some of the audit points that will be very helpful in auditing a high risk comapny. Solution The Auditors need to be very cautious while auditing a firm where r.

1. The Auditors need to be very cautious while auditing a firm where risk of management fraud is
very high.
Before starting the actual audit , the audtors need to assess the following status regarding the
corporate governance of the company;
1. Whether there is an effective Audit Committee having independent Directors and at least one
Financial expert is working. Whether the Audit committee works independently and challenges
management views if required? Whether the Auditors report directly to Audit committee without
any interference from Management? Does the Audit committee understand well the business and
its environment and riskd?
2. Whether the internal Audit of the company is opeartional and give its suggestions
independently?
3. Whether there is strong whistleblower policy and protection for whistleblowers ? Has anything
in the recent pat been reported by whistleblowers?
After assessing the coroprate Governance status of the company , the Auditors need to assess the
fraud risks associated with the business. The Auditors must assess various finance processes for
risk from the input providers, from system or ERP, from output and storage of data and risks
from lapse in approval system or risks from ineffective segregation of duty.
According to the risk assessment, Auditors need to chalk out the Audit paln and do extended
audit if required in the vulnerable areas. Senior partners and associates must be deployed in such
audits to avoid any lapse due to inexperience in auditing.
While doing the actual audit, the following points may be specifically checked;
1. Whether there is frequest and unreasonable change in Accounting Principles and estimates,
2. Whether any loans or advances made to employees or Directors,
3. Whether any asset or liability that is directly related to comapny has been shown as asset &
liability of any special purpose entity (SPE) and no detailed disclosure made about that.
4. Whether some crucial disclosures are made an a masked and incorrect manner.
5. Whether any incorrect/inflated/deflated revenue or expense recorded and approved by
management.
6. Whether any fraudulane payment/receipt/debit or credit note payment or receipt has been
recoreded and approved by management?
7. Whether bad debt or other provision amounts are not based on realistic calculation and twisted
as per management advice?
8. Whether bank transactions are properly done and rconciliations are matched with bank
statementa and whether bank deposit receipts are cross tallied with bank physically?
9. Whether master data related to vendor and cutsomer master creation, manitaning the rates and

2. discount rates , vendor and customer bank details etc are manitained by authorised persons have
specific access and are properly authorised? The master data change trails need to be carefully
audited.
These are some of the audit points that will be very helpful in auditing a high risk comapny.
Solution
The Auditors need to be very cautious while auditing a firm where risk of management fraud is
very high.
Before starting the actual audit , the audtors need to assess the following status regarding the
corporate governance of the company;
1. Whether there is an effective Audit Committee having independent Directors and at least one
Financial expert is working. Whether the Audit committee works independently and challenges
management views if required? Whether the Auditors report directly to Audit committee without
any interference from Management? Does the Audit committee understand well the business and
its environment and riskd?
2. Whether the internal Audit of the company is opeartional and give its suggestions
independently?
3. Whether there is strong whistleblower policy and protection for whistleblowers ? Has anything
in the recent pat been reported by whistleblowers?
After assessing the coroprate Governance status of the company , the Auditors need to assess the
fraud risks associated with the business. The Auditors must assess various finance processes for
risk from the input providers, from system or ERP, from output and storage of data and risks
from lapse in approval system or risks from ineffective segregation of duty.
According to the risk assessment, Auditors need to chalk out the Audit paln and do extended
audit if required in the vulnerable areas. Senior partners and associates must be deployed in such
audits to avoid any lapse due to inexperience in auditing.
While doing the actual audit, the following points may be specifically checked;
1. Whether there is frequest and unreasonable change in Accounting Principles and estimates,
2. Whether any loans or advances made to employees or Directors,
3. Whether any asset or liability that is directly related to comapny has been shown as asset &
liability of any special purpose entity (SPE) and no detailed disclosure made about that.
4. Whether some crucial disclosures are made an a masked and incorrect manner.
5. Whether any incorrect/inflated/deflated revenue or expense recorded and approved by
management.
6. Whether any fraudulane payment/receipt/debit or credit note payment or receipt has been

3. recoreded and approved by management?
7. Whether bad debt or other provision amounts are not based on realistic calculation and twisted
as per management advice?
8. Whether bank transactions are properly done and rconciliations are matched with bank
statementa and whether bank deposit receipts are cross tallied with bank physically?
9. Whether master data related to vendor and cutsomer master creation, manitaning the rates and
discount rates , vendor and customer bank details etc are manitained by authorised persons have
specific access and are properly authorised? The master data change trails need to be carefully
audited.
These are some of the audit points that will be very helpful in auditing a high risk comapny.