Describe the fraud risk that the auditors should risk for each of the four circumstances given.

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Answer 1

Question

Chapter 6, Problem 36QRA

a.

To determine

Describe the fraud risk that the auditors should risk for each of the four circumstances given.

b.

To determine

Indicate the possible appropriate response from the auditors under given circumstances describing increasing fraud risk factors.

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“The deliberate fraud committed by management that injures investors and creditors through materially misleading financial statements. The use of incentive systems and opportunities for fraudulent behavior are associated with higher fraud risk assessments by audit partners; however, the most important factors are senior management ethical attitudes and dishonest communication from management with the external auditor.” Required: Compare and contrast financial statement fraud with asset misappropriation. Why is it important to analyze the relationship between a company and its auditors?

With respect to fraudulent financial reporting, which one of the following statements is not correct? a.The risk that the auditor will not detect misstatement due to management fraud is greater than those due to employee fraud. b.It is difficult for the auditor to determine if misstatements in accounting estimates are caused by fraud or error. c.When the audit is properly planned and performed in accordance with ISAs, material misstatements are guaranteed to be detected by the auditor. d.Excessive pressure on management to meet expectations of third parties creates incentives for

The auditor’s primary consideration is whether, and how, internal control prevents, or detects and corrects: Material misstatement of the entity’s financial statements Financial statement fraud Incentives that prompt an employee to behave improperly illegal actions of the Management

Answer 2

Question

Chapter 6, Problem 36QRA

a.

To determine

Describe the fraud risk that the auditors should risk for each of the four circumstances given.

b.

To determine

Indicate the possible appropriate response from the auditors under given circumstances describing increasing fraud risk factors.

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Answer 3

Question

Chapter 6, Problem 36QRA

a.

To determine

Describe the fraud risk that the auditors should risk for each of the four circumstances given.

b.

To determine

Indicate the possible appropriate response from the auditors under given circumstances describing increasing fraud risk factors.

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Answer 4

Question

Chapter 6, Problem 36QRA

a.

To determine

Describe the fraud risk that the auditors should risk for each of the four circumstances given.

b.

To determine

Indicate the possible appropriate response from the auditors under given circumstances describing increasing fraud risk factors.

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Answer 5

Chapter 6, Problem 36QRA

a.

To determine

Describe the fraud risk that the auditors should risk for each of the four circumstances given.

b.

To determine

Indicate the possible appropriate response from the auditors under given circumstances describing increasing fraud risk factors.

Answer 6

Chapter 6, Problem 36QRA

a.

To determine

Describe the fraud risk that the auditors should risk for each of the four circumstances given.

Answer 7

Chapter 6, Problem 36QRA

a.

To determine

Describe the fraud risk that the auditors should risk for each of the four circumstances given.

Answer 8

b.

To determine

Indicate the possible appropriate response from the auditors under given circumstances describing increasing fraud risk factors.

Answer 9

b.

To determine

Indicate the possible appropriate response from the auditors under given circumstances describing increasing fraud risk factors.

Answer 10

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Answer 11

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Answer 13

Ch. 6 - Prob. 1RQ Ch. 6 - Prob. 2RQ Ch. 6 - Prob. 3RQ Ch. 6 - Discuss what is meant by the phrase shopping for...Ch. 6 - Prob. 5RQ Ch. 6 - Prob. 6RQ Ch. 6 - Prob. 7RQ Ch. 6 - Prob. 8RQ Ch. 6 - Prob. 9RQ Ch. 6 - Prob. 10RQ

Describe the fraud risk that the auditors should risk for each of the four circumstances given.

Solution Summary: The author enumerates the fraud risks that auditors should risk for each of the four circumstances. Fraud is likely to be exercised by the subsidiary management through manipulative financial reporting.

Concept explainers

Describe the fraud risk that the auditors should risk for each of the four circumstances given.

Indicate the possible appropriate response from the auditors under given circumstances describing increasing fraud risk factors.

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Chapter 6 Solutions