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    Fraud at The Engagement Level: Expositor: Javier Becerra

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    Walter Córdova Macedo

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    © All Rights Reserved
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    Fraud at The Engagement Level: Expositor: Javier Becerra

    Uploaded by

    Walter Córdova Macedo
    73 views11 pages

    Original Title

    Fraud_Triangle.pdf

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    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    73 views11 pages

    Fraud at The Engagement Level: Expositor: Javier Becerra

    Uploaded by

    Walter Córdova Macedo

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 11

    Fraud at the Engagement Level .

    Expositor: Javier Becerra


    Objectives
    You will be able to:
    • Describe what fraud is.
    • Describe and apply the guidance for consideration of fraud
    in a financial statement audit.
    • Identify fraud risk factors and circumstances that indicate
    the possibility of fraud.
    • Modify audit procedures in response to the assessment of
    fraud risk factors or circumstances that indicate the
    possibility of fraud.
    • Apply professional skepticism in interpreting results of audit
    procedures performed on journal entries, management
    estimates, and unusual transactions.
    Partners in Learning ©2000-2008 Deloitte Touche Tohmatsu Slide 1
    Fraud triangle

    INCENTIVE/PRESSURE

    Partners in Learning ©2000-2008 Deloitte Touche Tohmatsu Slide 2


    Audit steps and fraud focus

    • What procedures do we perform to identify fraud risk


    factors?
    • What procedures do we perform to respond to identified
    fraud risk factors?
    • What procedures do we perform to evaluate and
    communicate the results of our testing?

    Partners in Learning ©2000-2008 Deloitte Touche Tohmatsu Slide 3


    Audit steps and fraud focus (cont’d)

    • Perform Preliminary Engagement Activities


    • Perform Audit Planning

    Understand:
    • Entity and its Environment
    • Internal Control
    • Accounting Process

    Gather fraud risk


    factors

    Partners in Learning ©2000-2008 Deloitte Touche Tohmatsu Slide 4


    Audit steps and fraud focus (cont’d)

    Discuss and analyze Obtain specific


    fraud risk factors information
    among the audit team to identify fraud risks

    Identify fraud risk factors

    Preliminary analytical
    review

    Partners in Learning ©2000-2008 Deloitte Touche Tohmatsu Slide 5


    Audit steps and fraud focus (cont’d)

    • Perform the Audit Plan

    • Perform Tests of Operating


    Effectiveness of Controls and
    Evaluate Results
    • Perform Substantive
    Procedures and Evaluate
    Results

    Respond to fraud
    risk factors

    Partners in Learning ©2000-2008 Deloitte Touche Tohmatsu Slide 6


    Audit steps and fraud focus (cont’d)

    Overall responses Evaluate controls

    Respond to fraud
    risk factors

    Change in nature,
    Address risk of
    timing, and extent
    management override
    of audit procedures

    Partners in Learning ©2000-2008 Deloitte Touche Tohmatsu Slide 7


    Fraud focus through the audit engagement

    IDENTIFY FRAUD RESPOND TO FRAUD


    RISK FACTORS RISK FACTORS

    FRAUD

    EVALUATE

    Partners in Learning ©2000-2008 Deloitte Touche Tohmatsu Slide 8


    Key financial statement frauds

    • Fictitious revenue schemes.


    • Fraudulent timing differences schemes.
    • Concealed liability and expense fraud schemes.
    • Improper disclosure fraud schemes.
    • Improper asset valuation fraud schemes.

    Partners in Learning ©2000-2008 Deloitte Touche Tohmatsu Slide 9


    Management override

    • Following procedures need to be performed by auditor:


    – Review appropriateness of journal entries.
    – Review accounting estimates for biases.
    – Obtain understanding of business rationale of significant
    transactions outside normal course of business.

    Partners in Learning ©2000-2008 Deloitte Touche Tohmatsu Slide 10

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