Fraud Examination

ACC 555   

 Fraudulent Financial Statements


        Chapter 14

  1. In an organization, who is responsible for the fair presentation of the financial statements?
  2. What is financial statement fraud (FSF)?
    Why is FSF often referred to as "cooking the books?" 
    What part of the process of preparing financial statements (e.g., application of GAAP) allows the books to be "cooked?"
  3. Who, Why, and How are FSFs committed? 
  4. Who gets hurt from FSF?
  5. Be ready to discuss the five major different ways that FSF can be committed. 
  6. What are some fraud risk factors?  What should you be looking for in an assessment of potential fraud?
  7. During the audit of financial statements, an auditor discovers that financial statements might be materially misstated due to the existence of fraud. Be prepared to discuss
    (1) the auditor's responsibility according to SAS No. 99, the PCAOB, and SOX for discovering FSF;
    (2) what the auditor should do if she is precluded from applying necessary audit procedures to learn more about and document the suspected FSF;
    (3) what the auditor should do if he finds that the fraud material affects the integrity of the financial statements.
  8. What are commonly used analytical techniques (ARPs) are used for financial statement analysis to detect fraudulent reporting?
  9. What is the concept of professional skepticism?