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Wiley Practitioner's Guide to GAAS 2018, 2nd Edition
book

Wiley Practitioner's Guide to GAAS 2018, 2nd Edition

by Joanne M. Flood
April 2018
Beginner to intermediate content levelBeginner to intermediate
880 pages
28h 54m
English
Wiley
Content preview from Wiley Practitioner's Guide to GAAS 2018, 2nd Edition

AU-C 240 Consideration of Fraud in a Financial Statement Audit

AU-C Original Pronouncements

Sources Statements on Auditing Standards (SASs) 122 and 128.

AU-C 240 Definitions of Terms

Source: AU-C 240.11

  1. Fraud. An intentional act by one or more individuals among management, those charged with governance, employees, or third parties, involving the use of deception that results in a misstatement in financial statements that are the subject of an audit.
  2. Fraud risk factors. Events or conditions that indicate an incentive or pressure to perpetrate fraud, provide an opportunity to commit fraud, or indicate attitudes or rationalizations to justify a fraudulent action.

Objectives Of AU-C Section 240

AU-C Section 240.10 states that the objectives of the auditor are to:

  1. Identify and assess the risks of material misstatement of the financial statements due to fraud;
  2. Obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud, through designing and implementing appropriate responses; and
  3. Respond appropriately to fraud or suspected fraud identified during the audit.

Requirements

Description and Characteristics of Fraud

Although fraud is a broad legal concept, the auditor's interest specifically relates to fraudulent acts that cause a material misstatement of financial statements. Two types of misstatements are relevant to the auditor's consideration in a financial statement audit.

  1. Misstatements arising from fraudulent financial ...
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Publisher Resources

ISBN: 9781119396482Purchase book