Читать книгу Wiley Practitioner's Guide to GAAS 2020 - Joanne M. Flood - Страница 126

Risk factors reflective of attitudes/rationalizations by board members, management, or employees that allow them to engage in and/or justify fraudulent financial reporting may not be susceptible to observation by the auditor. Nevertheless, the auditor who becomes aware of the existence of such information should consider it in identifying the risks of material misstatement arising from fraudulent financial reporting. For example, auditors may become aware of the following information that may indicate a risk factor:

 Ineffective communication, implementation, support, or enforcement of the entity’s values or ethical standards by management or the communication of inappropriate values or ethical standards.

 Nonfinancial management’s excessive participation in or preoccupation with the selection of accounting principles or the determination of significant estimates.

 Known history of violations of securities laws or other laws and regulations, or claims against the entity, its senior management, or board members alleging fraud or violations of laws and regulations.

 Excessive interest by management in maintaining or increasing the entity’s stock price or earnings trend.

 A practice by management of committing analysts, creditors, and other third parties to achieve aggressive or unrealistic forecasts.

 Management failing to correct known reportable conditions on a timely basis.

 An interest by management in employing inappropriate means to minimize reported earnings for tax-motivated reasons.

 Low morale among senior management.

 The owner-manager making no distinction between personal and business transactions.

 Dispute between shareholders in a closely held entity.

 Recurring attempts by management to justify marginal or inappropriate accounting on the basis of materiality.

 Strained relationship between management and the current or predecessor auditor, as exhibited by the following:Frequent disputes with the current or predecessor auditor on accounting, auditing, or reporting matters.Unreasonable demands on the auditor, such as unreasonable time constraints regarding the completion of the audit or the issuance of the auditor’s report.Restrictions on the auditor that inappropriately limit access to people or information or the ability to communicate effectively with the board of directors or audit committee.Domineering management behavior in dealing with the auditor involving attempts to influence the scope of the auditor’s work or the selection or continuance of personnel assigned to or consulted on the audit engagement.