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What is the auditor's responsibility for finding error and fraud?
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∙ 11y ago
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∙ 11y ago
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What are the functions of the auditors?
Auditors are supposed to plan and perform the audit to obtain reasonable assurance that the financial statements presented by management are free of material misstatement that are caused by error or fraud. They only provide reasonable assurance not a guarantee that there is no misstatement or fraud. If they auditor is auditing a public company they also have the responsibility to evaluate internal controls. In other words the auditor plans and audit, gathers evidence, and then makes a report stating whether or not they believe the financial statements are presented fairly.
What is an audit expectation gap?
Expectations gap === The expectation gap is the gap between the auditors' actual standard of performance and the various public expectations of auditors' performance (as opposed to their required standard of performance). Many members of the public expect that:auditors should accept prime responsibility for the financial statements,auditors 'certify’ financial statements,a 'clean’ opinion guarantees the accuracy of financial statements,auditors perform a 100% check,auditors should give early warning about the possibility of business failure, andauditors are supposed to detect fraud (See Wisconsin Law Journal article entitled, "Why Didn't Our Auditors Find the Fraud?").Such public expectations of auditors, which go beyond the actual standard of performance by auditors, have led to the term 'expectation gap’. Above retrieved from Abrema http://www.abrema.net/abrema/expect_gap_g.html Viper1
When risks of material misstatement due to fraud are identified how should auditors adjust their audit approach?
meaning of material misstatement
Why must a public company have an external auditors?
External auditors are required to ensure there is no fraud (hanky panky) going on in the company. If you run a company that are check by your own employees, you cannot be certain that the checks are neutral. External auditors are independent parties who provide a realistic and impartial view into the company's conduct.
What is an intentional mistake in the account balance called?
However, if this mistake was intentional (i.e., the client failed to record the sale on purpose), auditors refer to the mistake as a fraud.
Differences between fraud and error?
differences between errors and frauds
How is auditing related to mathematics?
Auditors use math to ramdomly select transactions/files to look over for the audit based on how certain they want to be that there is no fraud. 90 % certain will require looking at fewer files that 99% certainty. Auditors look at the math on certain transactions for fraud. If someone bought 10 things that cost 100 dollars each, then the contract calls for a 3% discount, what should have been paid? Compare to what was really paid. If not the same is this evidence of fraud, embezellment, or ust a mistake?
How do you use a proof of cash?
A proof of cash is a four-column bank reconciliation that has proof of disbursements and receipts. It is used by auditors when they are looking for errors, fraud, misstatements, and discrepancies.
Audit risk in detecting fraud while preparing financial reports and the measures to reduce those fraud?
The audit risk in detecting fraud while preparing financial reports is the fact that the auditors were not able to actually verified to the best of their abilities the source or sources of information indicated in the financial statements. It is very important that the auditors must be independent and must be free to do everything needed to provide the user of the financial reports an opinion that must be base on generally accepted accounting principles and standard auditing practice.
What is a SAS 99 or what is meant by it?
An SAS 99 is part of the auditing standards. It is one of the rules which requires auditors to look for any signs of fraud throughout the process and take action where needed.
The Challenge of Internal Audit Jobs?
Internal auditors have the responsibility of making sure that their company's financial records are in order. They evaluate the controls that govern the company's income and expense accounts to make certain they are sufficient. These accounts must meet company and government requirements. Company requirements are based on company policy; government requirements are drawn out through various laws and procedures. Internal auditors must assure that the controls are sufficient to eliminate error or fraud. They prepare the company's tax records for the government. Dealing with overall budgets, internal auditors have also become computer savvy with a handle over the various computer software packages that aid in organizing and reporting accounts. Internal auditors generally have no responsibilities for producing strategy based on accounts or company projections. Internal auditors in the United States become Certified Internal Auditors by passing the Institute of Internal Auditors four-part examination. The examination is based on such topics as risk and control, governance concepts, fraud elements, tools for audit engagement, financial accounting, information technology concepts, and competitive analysis and strategies. After passing the test, the internal auditor must decide in which one of four areas he or she would like to receive a certificate. One can qualify for the Certified Internal Auditor certificate; the Certified Government Auditing Professional certificate; the Certified Financial Services Auditor certificate or receive Certification in Control Self-Assessment. The IIA expects internal auditors to have bachelor degrees and to follow the IIA Code of Ethics. The IIA standards are promoted and recognized across the globe, and many international internal auditors obtain their certification to practice in their countries from the IIT. Internal auditors have a medium salary of $54,000. After experience, the upper levels of internal auditors command $94,100. The number of jobs is expected to increase by 22 percent through 2014. By obtaining an MBA in accounting, internal auditors can reach a much higher salary level. The MBA degree will give the auditor necessary skills to interpret and adapt new laws to their work. Internal auditors have privileged status positions. It is important that they have a good knowledge of the law to protect their access to and knowledge of sensitive and confidential information.
From what does pecuniary liability strive to protect the Government?
It is designed to protect the government from loss due to fiscal irregularities on the part of accounting officials.
