10 Step Fraud Risk Assessment and Fraud Procedures

  1. Understand the nature of fraud, the motivations to commit fraud, and the manner in which fraud may be perpetrated
  2. Exercise "professional skepticism" throughout the entire fraud risk assessment process
  3. "Brain storm" and share knowledge with other audit team members
  4. Obtain information useful in identifying and assessing fraud risk
  5. Identify the specific fraud risks, including potential magnitude, and areas like to be affected by a fraud
  6. Evaluate the quality of the company's controls and potential effectiveness in mitigating the risk of fraud
  7. Respond; that is, adjust audit procedures to assure that the audit adequately address the risk of fraud and provides evidence specifically related to the possibility of fraud
  8. Evaluate findings. If evidence signals that a fraud might exist, determine whether or not forensic or specialist auditors are needed to complete the investigation. Reevaluate the need for additional procedures to determine the existence of amount of fraud
  9. Communicate the possibility that fraud exist to management, or to the audit committee or the full board if the fraud is material and/or involves members of management
  10. Document the audit approach, starting with Step 1 through the completion of all of the steps identified above
Card Set
10 Step Fraud Risk Assessment and Fraud Procedures
Auditing Midterm Short Answers Q2