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Audit Report And Control Evaluation

404 words - 2 pages

The Audit Report and Internal Control Evaluation
University of Phoenix
Michelle Melville
Auditing/ACC 546
April 21, 2014
Professor Hillary Edmondson

Auditor’s Responsibility for Detecting and Reporting Fraud
It is the responsibility of the audit engaged in the audit process to detect material misstatement in management’s assertions. These material misstatements must also be properly reported. Arens et. al (2012) defined fraud as “…any intentional deceit meant to deprive another person or party of their property or rights” p 433. Fraud as it relates to financial reporting is the intentional misstatements of the company’s financial statements and the misappropriations ...view middle of the document...

In using professional skepticism the auditor must never assume the honesty or dishonesty with management reporting. The conditions for rationalization may cause even the most honest person to make allowances for committing fraud (Arens et. al, 2012). Once the auditor discovers fraud has occurred, it is their responsibility to critically evaluate the evidence to determine whether the fraud really exists. As such, the auditor will further probe the specific issue, gather any additional evidence, and finally consult with the other members of the audit team.
Auditing standards requires the auditor to document all aspects of the fraud assessment. The includes the discussion with other members on the audit team, the procedures the auditor carried out to gather information, the possible risks the auditor identified, the results of the procedures the auditor performed, and any other conditions relative to the risks identified during the evidence gathering. All communication between the auditor and any other party must also be documented in the report (Arens et. al, 2012). The auditor then evaluates the factors that can reduce this fraud risks and presents everything in the report to management.

Arens, A.A., Beasley, M.S., Elder, R.J., (2012), Auditing and Assurance Services, Fourteenth


Apollo Shoes, Inc - McGraw-Hill/Irwin, 2007, The McGraw-Hill Companies, Inc., Retrieved

from University of Phoenix Website

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