ACTIVITY CHAPTER 4 PROFE04

Explain the following questions in essay.

1. Discuss a scenario for an example of fraud.

- Credit cards are available through an internet channel from a card
provider. Fraudsters create false identities by taking advantage of a possibly lax
credit policy. The scammers usually make up names and addresses and give each
identity a birth date between 21 and 23 years old.

2. What is PSA 250?

- The auditor's role to consider laws and regulations when undertaking an
audit of financial statements is addressed in this Philippine Standard on Auditing
PSA. Other assurance engagements in which the auditor is specifically engaged
to test and report separately on compliance with certain laws or regulations are
not covered by this PSA.

3. What are the ways to avoid fraudster on a company?

1. Be skeptical.
2. Know your business inside out.
3. Know your customers and suppliers.
4. Identify areas where your business is vulnerable to fraud.
5. Develop a strategy and talk about fraud.
6. Take extra care against cyberattacks.
7. Understand your finances.
8. Secure and protect your property.

4. How to detect fraud in a business?

- Internal auditor plays a key role in developing a system of fraud
indicators, so that suspicious activities are flagged and investigated. Finally,
internal auditors may be concerned with violations of the organization’s policies
and procedures even when they do not involve fraud.

5. What is the importance of evaluation during a materially misstated as a result of

fraud?
- This is to guarantee that the materiality determination is based on current
financial facts, as opposed to predicted or draft financial statements, which is how
materiality is initially assessed during the audit planning stage.