Read the following research paperand answer this question: How canaudit seniors prevent materialmisstatement of revenue in future?(Hammersley, J.S., Johnstone, K. Mand Kadous, K., 2011. How doaudit seniors respond to heightenedfraud risk? Auditing: A Journal ofPractice & Theory, 30(3), pp.81-101.)

The objective of the question is to understand the strategies that audit seniors can employ to…

Answered: Read the following research paper and…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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According to American Institute of Certified Public Accountants (AICPA) auditing standards,2 the primary responsibility for prevention and detection of fraud rests with those charged with governance and management. There are a number of strategies3 to help management and public officials navigate the challenges associated with prevention and detection of fraud. Explain some other fraud prevention methods in which it can be avoided? I need typed answer with explanation N
Please explain how you arrived at the correct answer. Thank you. 1. Auditors must consider fraud in their audits. Which is not a key consideration? A) whether fraud is present. B) whether technology is involved. C) whether fraud is material. D) all of these are true
Ms. Fatema started his auditing service for various types of companies in the year 2020. Can you explain her about acceptable audit risk, client business risk, and risk of material misstatements? When she what to consider these types of risks?
Auditing standards require that the engagement team members engage in discussion about the susceptibility of the financial statements to the risk of fraud. How does this discussion relate to the required discussion about the risk of material misstatement?
Course: Auditing You are the audit partner of ‘Power Auditors’ and you are auditing your client ‘Freefall Incorporated’. After finishing all the tests on the client’s financial information you determine that there is a material misstatement in the accounts receivable account of your client. This misstatementhas also caused the sales revenue account to be materially misstated. You have notified the client about the misstatement but as of reporting date, client has not made any corrections. You also found misstatements in the fixed assets and accounts payable accounts, but they are not material as per your assessment. You found no other misstatements in the otheraccounts. In addition to this, you also notice that the client has a large amount of debt which will be due next year. As the business has suffered a loss this year and does not have enough cash low at the end of the year to pay the debt next year, the client will need to secure some form of refinancing next year. Without this…
The following questions concern the auditor’s responses to thepossibility of fraud.a. When fraud risk factors are identified during an audit the auditor’s documentationshould includeThe Risk The Auditor’s Response toFactors Identified The Risk Factors Identified(1) Yes Yes(2) Yes No(3) No Yes(4) No No
Indicate whether the information indicates an increased risk for fraud. If the information indicates an increased risk of fraud, indicate which fraud condition (incentives/pressures, opportunities, or attitudes/rationalization) is indicated. During audit planning, an auditor obtained the following information: Management has a strong interest in employing inappropriate means to minimize reported earnings for tax-motivated reasons. The company’s board of directors includes a majority of directors who are independent of management. Assets and revenues are based on significant estimates that involve subjective judgments and uncertainties that are hard to corroborate. The company is marginally able to meet exchange listing and debt covenant requirements. New accounting pronouncements have resulted in explanatory paragraphs for consistency for the company and other firms in the industry.
Assume a third party such as a successor audit firm quickly discovers a fraud that the predecessor external auditor has overlooked for years. Do you think this provides evidence supporting scienter? Explain.
you have been engaged as a consultant for Zenith Bank Ghana LTD. Draw up a comprehensive fraud risk assessement that would incorporate a formal process of accountability and reponsibility going forward for Zenith Ghana Ltd.
At Crazy Eddie, the management team established “deceiving the auditors” as a primary strategic objective. If management spends considerable time and effort on this goal, is it possible that the auditor can still fulfill his or her mission of ensuring the financial statements are not materially misstated? If so, what steps can an auditor take to overcome these types of situations?
A client uses percentages of aging categories to calculate the allowance for doubtful accounts. When auditing the allowance for doubtful accounts, the auditor must… Question 4 options: Ensure that the client’s aging categories are consistent with industry averages. Ensure that the client has calculated the allowance for the current and all prior years using the same percentages for uncollectible accounts. Perform tests to ensure that the aging categories are accurate. Perform tests to ensure that management has not exercised judgment when calculating the allowance for doubtful accounts.
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