• fraud in a ﬁ nancial statement audit;
• actual, perceived or potential conﬂ icts of interest;
• anonymous tips and complaints; and
• through interaction with general counsel, compliance matters such as those that relate to the Foreign Corrupt Practices Act (FCPA).
• Was the scope of the independent investigation sufficient? Why or why not?
• If the audit engagement team …show more content…
Auditing Standards Board deﬁ nes misstatements, and describes the types of misstatements that anti-fraud measures are intended to mitigate, as follows:
Misstatements arising from fraudulent ﬁ nancial reporting are intentional misstatements or omissions of amounts or disclosures in ﬁ nancial statements designed to deceive ﬁ nancial statement users where the effect causes the ﬁ nancial statements not to be presented, in all material respects, in conformity with generally accepted accounting principles (GAAP). Fraudulent ﬁ nancial reporting may be accomplished by the following:
• Manipulation, falsiﬁ cation or alteration of accounting records or supporting documents from which ﬁ nancial statements are prepared
• Misrepresentation in or intentional omission from the ﬁ nancial statements of events, transactions or other signiﬁ cant information
• Intentional misapplication of accounting principles relating to amounts, classiﬁ cation, manner of presentation or disclosure 4
Misstatements arising from misappropriation of assets involve the theft of an entity’s assets where the effect of the theft causes the ﬁ nancial statements not to be presented, in all material respects, in conformity with GAAP. Misappropriation of assets can be accomplished in various ways, including embezzling receipts, stealing assets, or causing an entity to pay