chapter 6 Planning and risk assessment.pptVIP

6 fraud, laws and regulations 6.1 what is fraud? -fraudulent financial reporting -misappropriation of assets 挪用资产 6.2 responsibilities with regard to fraud management responsibility: implement and operate adequate control system for prevention and detection of fraud and error external auditors’ responsibility: -assess the risk of material misstatement due to fraud -design appropriate tests to obtain reasonable assurance that the financial statements are free from material misstatements due to fraud or error -maintain professional scepticism 6.3 reporting Reporting of fraud/ suspected fraud to Appropriate level of management (possibly) those charged with governance -to users of the audit report -if the financial statements have been materially misstated because of the fraud (in some cases) to regulatory/ enforcement authorities -can the auditors report to third parties -disclosure in the public or national interest 6.4 law and regulations -non-compliance by the entity with laws and regulations may materially affect the financial statements -audit procedures should provide assurance that all material instances of non-compliance with laws and regulations will be detected when non-compliance is discovered -reporting to management -reporting to users of the audit report -reporting to regulatory authorities * 检查风险 * * Ask the students to think of others: here are some from the (now withdrawn) ISA 400: FINANCIAL STATEMENT LEVEL: Integrity of management Management experience Unusual pressures on management Nature of business Industry factors ACCOUNT BALANCE LEVEL: FS A/cs susceptible Complexity of underlying transactions/ events Degree of judgement Susceptibility to loss or misappropriation Unusual transactions * * Part C Planning and Risk Assessment Demonstrate how the auditor obtains an understanding of the entity and its environment, assesses the risk of material misstatement, whether arising from fraud or other irregularities and pl