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Trey4sho Trey4sho
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Describe the five sources of information gathered to assess fraud risks.
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Auditing and Assurance Services

Auditing and Assurance Services


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The five sources of information to assess fraud risk are:
•Communications among audit team members. The following ideas should be "brainstormed"
(1)How and where the entity's financial statements might be susceptible to material misstatements due to fraud, including known external and internal factors that might (a) create an incentive or pressure for management to commit fraud, (b) provide the opportunity for fraud to be perpetrated, and (c) indicate a culture or environment that enables management to rationalize fraudulent acts. 
(2)How management could perpetrate and conceal fraudulent financial reporting. 
(3)How anyone might misappropriate assets of the entity.
(4)How the auditor might respond to the susceptibility of material misstatements due to fraud.
•Inquiries of management. These inquiries should address whether management has knowledge of any fraud or suspected fraud within the company. Auditors should also inquire about management's process of assessing fraud risks, the nature of fraud risks identified by management, any internal controls implemented to address those risks, and any information about fraud risks and related controls that management has reported to the audit committee or others charged with governance.
•Risk factors. The auditor must evaluate whether fraud risk factors indicate incentives or pressures to perpetrate fraud, opportunities to carry out fraud, or attitudes or rationalizations used to justify a fraudulent action.
•Analytical procedures. Auditors must perform analytical procedures during the planning and completion phases of the audit to help identify unusual transaction or events that might indicate the presence of material misstatements in the financial statements. Analytical procedures include ratio analysis, horizontal analysis, and vertical analysis.
•Other procedures. Auditors should consider all information they have obtained in any phase or part of the audit as they assess the risk of fraud. Information about management's integrity and honesty, inquires and analytical procedures, and information considered in assessing inherent and control risks, may lead to auditor concerns about the likelihood of misstatements due to fraud.

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Trey4sho Author
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2 months ago
This helped my grade so much Perfect
TheMoffattMan
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Thank you, thank you, thank you!
zbmallo3
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Thanks for your help!!
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