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Arens14e ch11 PPT
Arens14e ch11 PPT
Chapter 11
5-5
Learning Objective 1
Define fraud and distinguish between
fraudulent financial reporting and
misappropriation of assets.
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Types of Fraud
Management
Fraud
Fraudulent
financial
reporting
Misappropriation
of assets
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Learning Objective 2
Describe the fraud triangle and identify
conditions for fraud.
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Opportunities
Attitudes/Rationalization
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Learning Objective 3
Understand the auditors responsibility
for assessing the risk of fraud and
detecting material misstatements
due to fraud.
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Documenting Fraud
Assessment
Discussion among engagement team
Procedures performed to assess risk
Specific risks and audit response
Reasons supporting conclusions
Other conditions and analytical
relationships
Nature of communications
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Learning Objective 4
Identify corporate governance and
other control environment factors
that reduce fraud risks.
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Organizational Factors
Contributing to Risk of Fraud
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Learning Objective 5
Develop responses to identified fraud
risks.
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Learning Objective 6
Recognize specific fraud risk areas and
develop procedures to detect fraud.
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Effect of Fictitious
Receivables on Accounting
Ratios
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Learning Objective 7
Understand interview techniques and
other activities after fraud is
suspected.
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Responding to Misstatements
That May Be the Result of Fraud
When fraud is suspected, the auditor gathers
additional information to determine whether
fraud actually exists.
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Type of Detection
Tip
46.2%
22.8%
By Accident
20.0%
18.6%
19.4%
Internal Audit
16.7
%
23.3%
Internal Controls
15.8
9.1 %
%
6.0%
3.2
%
External Audit
Notified By Police
0%
$1,000,00
0+
All
Cases
30
40%
50
%
%
Note: The sum of percentages in this chart exceeds 100 percent because in some cases respondents identified more than one
10%
20%
detection
method.
2012 Prentice
Hall Business Publishing, Auditing 14/e, Arens/Elder/Beasley
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Evaluating
responses
Observing
behavioral cues
2012 Prentice Hall Business Publishing, Auditing 14/e, Arens/Elder/Beasley
Interrogative
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End of Chapter 11
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