Page 53 - AAA Integrated Workbook STUDENT S18-J19

Professional responsibilities and liability

2.3 Responses to an assessed risk of fraud

 Assign responsibility to personnel with appropriate knowledge and skill.

 Evaluate whether the accounting policies of the entity indicate fraudulent
financial reporting.

 Use unpredictable procedures to obtain evidence.

2.4 Audit procedures

 Review year-end journals and adjustments as these may be used to manipulate
the figures in the financial statements.

 Review accounting estimates and areas of management judgment for evidence
of bias.

 Review transactions outside the normal course of business which indicate
fraudulent financial reporting.

 Obtain written representation from management and those charged with
governance that they:

– acknowledge their responsibility for internal controls to prevent and detect
fraud.

– have disclosed to the auditor the results of management’s fraud risk
assessment

– have disclosed to the auditor any known or suspected frauds.

– have disclosed to the auditor any allegations of fraud affecting the entity’s
financial statements.

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