Читать книгу Wiley Practitioner's Guide to GAAS 2020 - Joanne M. Flood - Страница 88

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 reporting

2 Misstatements arising from misappropriation of assets

(AU-C 240.02–.03)

Fraudulent financial reporting does not need to involve a grand plan or conspiracy. Management may rationalize that a misstatement is appropriate because it is an aggressive interpretation of accounting rules, or that it is a temporary misstatement that will be corrected later.

Fraudulent financial reporting and misappropriation of assets differ in that fraudulent financial reporting is committed, usually by management, to deceive financial statement users, whereas misappropriation of assets is committed against an entity, most often by employees.

Fraud Risk Factors. Fraud generally involves the following three conditions:

1 A pressure or an incentive to commit fraud

2 A perceived opportunity to do so

3 Rationalization of the fraud by the individual(s) committing it

(AU-C 240.A1)

However, not all three conditions must be observed to conclude that there is an identified risk. It is particularly difficult to observe that the correct environment for rationalizing fraud is present.

Although fraud usually is concealed, the presence of risk factors or other conditions may alert the auditor to its possible existence.

The auditor should be aware that the presence of each of the three conditions may vary, and is influenced by factors such as the size, complexity, and ownership of the entity. These three conditions usually are present for both types of fraud.