Audit Technical Flashcards

Question

CSAE 3531 - Direct engagement to report on compliance

Answer 1

Can be an audit or review engagement. Practitioner forms an opinion on whether or not entity has complied with agreement, statute or regulation in question. Specified requirements must comprise criteria or can be used as a basis for developing criteria. Subject matter must be within prof. expertise of the engagement team Required to obtain understanding of entity & its environment and the specified requirements Significance (not materiality) shall be considered when: 1. determining nature, timing and extent of procedures 2. evaluating whether an instance of non-compliance is significant Report should include: - identification of specified requirements and significant interpretations - description of mgmts responsibilities - description of practitioners responsibilities - practitioners conclusion Less specified version is CSAE 3001

Answer 2

Audit level assurance Practitioner generates a written report or oral advice on application of accounting principles to specific transaction or impact of specific transaction on opinion to be rendered on FS. The report is addressed to the entity and includes: - relevant facts - circumstances - assumptions - sources of information - express a conclusion on appropriate accounting principles or type of opinion that may rendered on entity's financial statements - will state that responsibility for proper accounting treatment rests with preparers of FS

Answer 3

Located in "assurance and related services guidelines" No opinion expressed. Limited to preparing the forecast or projection based on information provided by management Practitioner needs to obtain sufficient understanding of entity and its environment including industry and accounting policies and practices of industry Compilation includes: - collecting financial information from mgmt that is used in assembly of financial forecast or projection - inquiring as to how mgmt developed the assumptions used in the financial forecast or projection - determining whether management's assumptions are appropriate for the circumstances & no obvious omissions or inconsistencies - performing limited procedures consisting primarily of inquiry related to the info supplied to the practitioner & considering whether the financial forecast/projection is prepared in accordance with GAAP

Answer 4

Located in "assurance and related services guidelines" Opinion provided but no level of assurance Practitioner will have to obtain evidence for assumptions and preform procedures on assumptions and forecast. Practitioner should also review entity's forecasting process to understand how mgmt identifies the effect of future events and assumptions and applies these to develop the forecast. Report will contain 3 paragraphs: 1. scope paragraph - identifying the forecast FS presented, describe nature of examination, practitioner has not responsibility to update report for events occurring after the date of the report 2. opinion paragraph - includes opinion as to whether: - at date of the report: assumptions developed by mgmt are suitably supported and consistent with plans of entity & provide a reasonable basis for the forecast - the forecast reflects the assumptions - financial forecast complies with presentation and disclosure standards set out in the CPA handbook 3. disclaimer that actual results may vary materially from forecast & disclaimer about achievability of results of the forecast

Answer 5

Audit - reasonable assurance provided Report that a service organization (think payroll provider or IT operations) can provide to companies that use their services to show that internal controls are suitably designed, implemented and operating effectively. 2 types: different things included in each report Type 1: applies to specific point in time when auditors actually review the design and implementation of the control system, no actual review of operating effectiveness of controls. Type 2: applies to ongoing design and effectiveness over a period of time Materiality consideration includes fair presentation of mgmt's description of the service organization's system and suitability of design of controls.

Answer 6

Must review for material inconsistencies and accurate reproduction Must perform procedures over intervening period events Practitioner has to give consent in writing prior to the use of the report in an offering document. Letter would clarify that the consent does not provide audit or review of offering document. Letter would inform securities register that practitioner has read the prospectus and has no reason to believe there are any misrepresentations. If unaudited FS are included in offering document, practitioner will need to perform review procedures on FS using Specialized Areas 7060 - review of interim FS

Answer 7

To assist audit committee in discharging its responsibilities with respect to interim FS issued under securities legislation Limited assurance since review engagement - procedures would be inquiry and analytical procedures - testing to determine if any material modification needs to be made for statements to be in accordance with applicable FR framework Must gain understanding of entity and its environment, including internal controls Must read interim MD&A and ensure consistency with interim FS Materiality will have to be considered Going concern procedures have to be performed if anything comes to light that casts significant doubt on going concern assumption

Answer 8

Management is required to assess company's ability to continue as a going concern. Assessment must be for 12 months or more and include projected cash flow. Auditor is responsible for obtaining sufficient evidence regarding the appropriateness of mgmt's use of the going concern assumption & conclude on if material uncertainty exists related to events or conditions that may cast significant doubt on entity's ability to continue as a going concern If auditor believes going-concern assumption is not appropriate, request that mgmt provide its going-concern assessment and review/perform procedures on the assessment. Description of procedures are in CAS 570 paragraphs 10 to 16 Indicators of going concern issue: located in risk assessment procedures and related activities section paragraph A3 Financial - working capital deficit, current ratio below 1, adverse key financial ratios, LT debt that is maturing and cannot be repaid or refinanced, reliance on excessive ST financing, inability to secure supplier credit or pay bills on time, negative operating cash flows, poor profitability and return ratios, substantial operating losses, negative retained earnings Operating - plans to liquidate company or cease operations, departures of key mgmt who cannot be replaced, loss of market share, loss of key customer, inability to obtain key supplies, loss of operating licence, labour issues Other - non-compliance with law, material lawsuits against the company that company will not be able to pay if lost, changes in laws or regulations that will negatively impact the company

Answer 9

Going concern assumption is appropriate -> unqualified opinion Going concern assumption is appropriate but a material uncertainty exists: - auditor must determine if FS adequately disclose the events/conditions that have led to the material uncertainty and that a material uncertainty exists - if disclosure is adequate -> unqualified opinion & emphasis of matter paragraph that will: -> highlight existence of material uncertainty relating to going-concern assumption -> draw attention to the note in the FS that sets out the going-concern disclosure - if disclosure is inadequate -> qualified or adverse opinion will be given Going concern assumption is not appropriate: - auditor must determine if FS are presented on a liquidation basis and if there is adequate disclosure - if presented appropriately -> unqualified opinion & emphasis of matter paragraph that will: -> highlight lack of going-concern assumption -> highlight that FS are prepared on a liquidation basis - if disclosure is inadequate -> adverse opinion emphasis of matter paragraph would be labeled - "Material uncertainty related to going concern"

Answer 10

CAS 701 Each key audit matter will have its own subheading Factors to consider when determining if something is a KAM: - areas of higher assessed risk of material misstatement - Significant auditor judgements relating to areas in the FS that involved significant mgmt judgement (includes accounting estimates) - effect on the audit of significant events or transactions that occurred during the period The section will document the following: - matters that required significant auditor attention during the audit - rationale for the auditor's determination as to whether or not each of those matters were KAM - when there are not KAM, rational should be provided as to the auditor's determination that there are no KAM to report

Answer 11

Misstatements are immaterial both individually and in aggregate Audit: When auditor concludes that the financial statements are presented fairly, in all material respects, in accordance with the applicable FR framework Review: When the practitioner has obtained limited assurance to be able to conclude that nothing has come to the practitioner's attention that causes the practitioner to believe that the FS are not prepared in all material respects, in accordance with the applicable FR framework

Answer 12

- Unmodified opinion (CAS 700) Modified opinions (CAS 705) - Qualified Opinion - Adverse Opinion - Disclaimer of Opinion

Answer 13

CSRE 2400 paragraphs 79 to 93 - Unmodified Conclusion Modified Conclusions: - Qualified Conclusion - Adverse Conclusion - Disclaimer of Conclusion

Answer 14

misstatements are material but not pervasive OR practitioner unable to gain sufficient audit evidence to make an opinion and possible effects could be material but not pervasive Report will include a paragraph called Basis for Qualified Opinion/Conclusion Audit: "except for effects of the matter(s) described in the Basis for Qualified Opinion section, when reporting in accordance with a fair presentation framework, the accompanying financial statements present fairly..." Review: "except for effects of the matter(s) described in the Basis for Qualified Conclusion paragraph, nothing has come to our attention that causes us to believe the FS do not present fairly..." When qualified opinion/conclusion due to inability to obtain sufficient audit evidence above statements would read "except for possible effects of the matter(s)"

Answer 15

misstatements are both material and pervasive to the FS Report must include Basis for Adverse Opinion/Conclusion section Audit: "because of the significance of the matter(s) decribed in the Basis for Adverse Opinion section, when reporting in accordance with a fair presentation framework, the accompanying financial statements do not present fairly..." Review: "due to the significance of the matter(s) decribed in the Basis for Adverse Conclusion paragraph, the financial statements do not present fairly..."

Answer 16

Any of the following: - effects that are not confined to specific element, accounts or items of the FS - if effects are confined, they represent or could represent a substantial proportion of the FS - for disclosures: improper or inadequate disclosures are fundamental to users' understanding of the FS

Answer 17

Unable to obtain sufficient audit evidence to make an opinion and effects could be both material and pervasive Report must include a Basis for Disclaimer of Opinion/Conclusion section Audit: - must state that auditor does not express an opinion on FS - "because of significance of matter(s) described in Basis for Disclaimer of Opinion section, the auditor has not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on the FS" - normal statement in report that indicated the FS have been audited must be changed to state that auditor was engaged to audit the FS. Review: - "due to significance of the matter(s) described in the Basis for disclaimer of conclusion paragraph, the practitioner is unable to obtain sufficient appropriate evidence to form a conclusion on the FS" - "accordingly, the practitioner does not express a conclusion on FS"

Answer 18

Audit: CAS 700 par 28 - states the audit was conducted in accordance with Canadian Generally accepted auditing standards (GAAS) - refers to section of auditor's report the describes the auditor's responsibilities - statement about auditor's independence from the entity & auditor's fulfillment of other ethical responsibilities - states whether auditor believes that the audit evidence obtained is sufficient and appropriate to provide a basis for the auditor's opinion Review: not required for unmodified opinion

Answer 19

Title of paragraph would be appropriately relabeled: Basis for Qualified Opinion, Basis for Adverse Opinion, Basis for Disclaimer of Opinion Audit: CAS 705 par 20 - 27 - includes are portions of normal basis for opinion plus: - description of matter giving rise to modification include all that apply: - describe & quantify the financial effects of the misstatement unless impracticable - explain how disclosures are misstated - describe the nature of omitted information & include omitted disclosures where practicable to do so (unless prohibited by law) - reason(s) for inability to obtain sufficient appropriate evidence Disclaimer of opinion - no longer include: - reference to section of auditor's report where auditor's responsibilities are described - statement about whether audit evidence obtained is sufficient and appropriate to provide a basis for the auditor's opinion Review: paragraph should include all that apply: - describe & quantify the financial effects of the misstatement unless impracticable - explain how disclosures are misstated - describe the nature of omitted information & include omitted disclosures where practicable to do so (unless prohibited by law) - reason(s) for inability to obtain sufficient appropriate evidence

Answer 20

CAS 450 - consider materiality and performance materiality - consider other issues that may cause an item to be material even if not (impact on covenants, regulatory requirements, etc) - consider effect on prior period/opening balances - consider pervasiveness of misstatements on financial statements - need to recalculate materiality after adjustment for misstatements

Answer 21

Provides additional information about an appropriately presented issue, due to its importance in being fundamental to users' understanding of the FS Audit: CAS 706 - must indicate that opinion has not been modified with respect to the matter emphasized Review: CSRE 2400 paragraph 95

Answer 22

Provides additional information about a matter other than those presented or disclosed that is relevant to the users' understanding of the practitioners report Audit: CAS 706 - used when item has been determined to not be a key audit matter Review: CSRE 2400 paragraph 97

Answer 23

CAS 530 Reasons to use sampling: - costly & time consuming to test 100% of population - nature & materiality of account or balance does not require testing of the full account/balance - auditor not required to obtain absolute assurance, just reasonable assurance Auditor must consider sampling risk Consider population characteristics to determine: - if sample is representative of population so sample can be extrapolated to estimate likely misstatements in the population - if population is complete - expected deviation or misstatement rate

Answer 24

risk that the practitioner's conclusion based on a sample may be different from the conclusion that would be reached if the entire population were subjected to the same audit procedure. Can lead to 2 types of erroneous conclusions: - controls are more/less effective than they actually are - material misstatement (does not) exists when it does (not). Sample selected must be of a sufficient size to reduce sampling risk to acceptably low level. Therefor sample size and sample risk are indirectly related: smaller sample size = bigger sampling risk, bigger sample size = smaller sampling risk

Answer 25

The process of dividing large populations of data into smaller groups of data or sub-populations (strata) . Each strata is a group of sampling units that have shared attributes or characteristics. Purpose: to perform more efficient and effective testing by reducing variability of items within each stratum due to them having similar characteristics. Allows for reduction is sample size without increasing sampling risk.

Answer 26

likely misstatement in representative items = (total misstatements discovered in sample items/total book value of representative items tested) x books value of representative item population Total misstatements in sample is the sum of understatements and overstatements, without using absolute value. Representative population = total population - significant items (high value items) - high risk items Significant and high risk items would each be tested separately from population Likely aggregate misstatement = total identified misstatement for non-representative items + likely misstatement in representative items

Answer 27

Items in sample must be selected in such a way that each sampling unit in the population has a chance of selection. Statistical sampling: - random selection of sample items - use of probability theory to evaluate sample results including measurement of sampling risk - each sampling unit has know probability of being selected therefor can be extrapolated - used to determine sample size required to meet pre-established criteria for accuracy (precision) and risk of the sample being non-typical for the population Non-statistical sampling (judgmental sampling): - practitioner used professional judgement to determine sample size, selecting sampling units and evaluating the results - degree of accuracy and possible non-representativeness cannot be measured

Answer 28

- Random selection: used random number generator - Systemic selection: (# of sampling units in population/total sample size) = sampling interval, sampling interval is applied to population in order to determine which sample items to select. Randomly select first sample unit within first sampling interval and then select every Xth unit afterwards. - Monetary unity sampling: each individual $ in population is considered a sampling unit, meaning account balances or amount in the population with a higher value have a proportionally higher chance of being selected - Haphazard selection: not structured technique while attempting to avoid conscious bias or predictability. not appropriate for statistical sampling - block selection: select a block of items grouped together within the population, not usually appropriate due to timing making items close together similar to each other and not representative of the rest of the year

Answer 29

Test of controls - practitioner reliance on operating effectiveness relevant controls -> the more the practitioner relies on controls, the greater the sample size should be for tests of controls - Increase in tolerable rate of deviation -> decrease sample size - increase in expected rate (#) of deviation of population being tested -> increase sample size - increase in practitioner's desired level of assurance that tolerable rate of deviation is not exceeded by actual rate of deviation in population -> increase sample size - increase in # of sampling units -> negligible effect: for large populations, actual size of population has little effect on the sample size. For smaller populations, audit sampling is likely not the most efficient means to obtaining audit evidence. Test of details: - increase in assessment of risk of material misstatement -> increase sample size - increase in use of other substantive procedures directed at the same assertion -> decrease sample size - increase in practitioner's desired level of assurance that tolerable misstatement is not exceeded by actual misstatement in the population -> increase sample size - Increase in tolerable misstatement -> decrease sample size - Increase in amount of misstatement the practitioner expects to find in population -> increase sample size - If population can be appropriately stratified -> sample sizes of each strata can be smaller - increase in # of sampling units -> negligible effect: for large populations, actual size of population has little effect on the sample size. For smaller populations, audit sampling is likely not the most efficient means to obtaining audit evidence.

Answer 30

Did misstatements arise from: - misunderstanding of accounting principles - simple mistakes or carelessness - intentional irregularity - override of internal control procedures or absence of internal controls

Answer 31

Practitioner's ability to act with objectivity integrity and professional skepticism. Need to be considered during acceptance/continuance stage of audit or review. Lack of independence precludes undertaking of audit/review engagement. Not required for compilation engagement but any independence threats should be documented. Independence is required both in fact and appearance

Answer 32

Practitioner must implement safeguards to eliminate threats or reduce to acceptably low level. Self-interest threat: when practitioner or firm has financial interest in the client Self-review threat: when practitioner is in the position of having to form an opinion on their own work Advocacy threat: when practitioner is perceived to promote or actually does promote the position of the client Familiarity threat: when practitioner has a close relationship with the client or key employees of the client, thus creating an environment where it is difficult for the practitioner to behave with professional skepticism Intimidation threat: when the client intimidates the practitioner of the firm

Answer 33

AuG-6: Examination of financial forecast or projection included in prospectus or other public offering document Specialized area 7060: auditor review of interim financial statements Specialized area 7150: Auditors consent for the use of a report of the auditor included in an offering document

Answer 34

Audit: reasonable assurance and positive opinion given as to if FS are free from material misstatements Review: limited assurance and negative conclusion given as to nothing has come to attention to make practitioner believe that FS are not presented fairly Compilation: no assurance and no opinion is provided

Answer 35

Audit & Review: FS must be prepared in accordance with ASPE, IFRS, or ASNPO standards. Or other special reporting framework. Compilation: no requirement for FS to comply with FR framework but a basis of accounting must be agreed upon.

Answer 36

Audit: must document and test internal controls to determine whether controls can be relied on. Assessment of risk of material misstatement is required. Review: not required to evaluate internal controls but still must obtain an understanding of the entity and its environment. Risk assessment is not explicitly required as part of planning but must identify areas in FS where material misstatements are likely Compilation: Must obtain knowledge of the entity's business and operations, accounting system and records, and basis of accounting to be applied, sufficient to perform the engagement

Answer 37

Compile financial information provided by management in accordance with selected basis of accounting. Not required to make inquiries or perform other procedures to verify, corroborate or review info supplied. Read compiled financial information to ensure that it doesn't appear misleading.

Answer 38

Audit: most costly and time consuming Review: Less costly and time consuming than Audit Compilation: least costly and time consuming

Answer 39

Audit - lack of independence precludes undertaking audit engagement Review - lack of independence precludes undertaking review engagement Compilation - practitioner does not have to be independent but discloser is recommended when not independent. If practitioner assisted client with accounting on an area with significant judgement then additional documentation should be provided on the area.

Answer 40

CSRS 4200.23 3rd party use does not preclude acceptance of engagement. For practitioner to accept, must determine: - if 3rd party is in position to request & obtain further info from the entity OR - if 3rd party has agreed with mgmt on the basis of accounting to be applied in the preparation of the compiled financial info If either is true then can accept the engagement.

Answer 41

Audit - required every year Review & compilation: required in first year and when terms of engagement are revised or revisited.

Answer 42

Audit & review - all disclosures required under Financial reporting framework must be included or opinion/conclusion will be modified Compilation - only required disclosure is basis of accounting.

Answer 43

Audit and review - required Compilation - not required but need acknowledgement from mgmt that they take responsibility for final version of compiled financial info.

Answer 44

Commonly used for: acquisition, tax transaction, joint venture, for particular sales or supplier contracts Customized engagement. No formal reporting standard but CRSR 4400 would be applicable. Overall risk assessment would be performed to determine areas of greatest risk, procedures will be developed & performed to address the risks identified. Report is on procedures performed and factual results including any errors found. - Must state that procedures performed do not constitute an audit. - disclaimer of opinion will have to be included Areas often examined: - financial review - operational review and analysis - tax areas of concern/investigation Usual risks to address: - overstatement of assets & revenue - understatement of liabilities & expenses Also need to consider quality of earnings which is the difference between cash flow and net income.

Answer 45

Operational: - Are earnings sustainable? - Do industry-specific regulations place any restrictions? - Synergies between acquiring company and target company - compatibility of employees - inefficiencies in production and distribution - is owner involvement a KSF? Tax: - form of the organization (sole prop, partnership, corp, CCPC or not) - unfiled or incorrectly filed tax returns -> interest and penalties - value used to transfer assets for tax purposes may be inadequate - loss carryforwards upon acquisition may not be available or may be insufficient

Answer 46

Per CSQM 1 - acceptance/continuation should be based on: - nature & circumstances of the engagement - integrity & ethical values of the client (including mgmt and those charged with governance) - firm's ability to perform engagement in accordance with prof. standards & applicable legal and regulatory requirements Per CAS 220 paragraph A50 - relevant info for making acceptance/continuation decision: - integrity & ethical values of the client - if sufficient & appropriate resources are available to perform the engagement - if mgmt & those charged with governance have acknowledged their responsibilities - if engagement team has competence & capabilities to perform engagement (including sufficient time) - if significant matters during current or previous engagement have implications for continuing the engagement

Answer 47

- communicate with previous auditor for acceptance of new client - communicate with independent 3rd parties (lawyers or creditors) - perform background check - obtain FS from prior periods

Answer 48

CAS 210 paragraph 6 - Determine if financial reporting framework is acceptable - Management must agree to their responsibilities in writing Mgmt responsibilities: - prepare the FS in accordance with appropriate FR framework - have operating internal controls - provide unrestricted access to info & people CAS 220 - Determine if there are any threats to independence - Ability of practitioner to mitigate engagement risk factors (need to consider complexity of transactions, client's accounting system, client's reputation, nature of business, internal controls, FS users, purpose of FS, client's history, experience with industry, industry regulations)

Answer 49

CAS 210 paragraph 8: - mgmt does not acknowledge its responsibilities in writing OR - chosen FR framework is not acceptable exception for when auditor is require to accept engagement by law or regulation.

Answer 50

CAS 510 Auditor must obtain sufficient appropriate audit evidence to determine if opening balances contain misstatements that materially affect the current period's FS: - have prior period's closing balances been brought forward correctly to current period - do opening balances reflect application of appropriate accounting policies - review predecessor auditor's working papers if prior yr FS were audited - determine if audit procedures performed in current period provide evidence relevant to opening balances - performing specific audit procedures to obtain evidence on opening balances (key areas would be inventory, cash balances, AR and AP balances) If unable to gain sufficient appropriate audit evidence then qualified opinion or disclaimer of opinion will be given.

Answer 51

CAS 610 Must evaluate internal audit function: paragraph 15 - internal audit function's organization status and relevant policies and procedures support objectivity of internal auditors - level of competence of internal audit function - internal audit function applies a systematic & disciplined approach (including quality control)

Answer 52

CAS 610 paragraph A7 - organization status of internal audit supports ability of function to be free from bias, conflict of interest or undue influence of others to override prof. judgements - being free from conflicting responsibilities - if those charged with governance oversee employment decisions related to internal audit function - constraints or restrictions placed on internal audit function by mgmt or those charged with governance - if internal auditors are members of relevant prof. bodies & memberships obligate compliance with relevant prof. standards relating to objectivity

Answer 53

CAS 610 paragraph A8 - if adequately and appropriately resourced relative to size of the entity and nature of operations - established policies for hiring, training and assigning internal auditors - internal auditors have adequate technical training and proficiency in auditing - internal auditors possess required knowledge relating to the entity's financial reporting and applicable FR framework - internal auditors possess necessary skills to perform work related to FS - internal auditors are members of relevant prof. bodies that oblige them to comply with relevant prof. standards including prof. development.

Answer 54

CAS 610 paragraph 17 must consider: nature & scope of work that has been performed and relevance to external auditor's overall strategy & plan Internal audit work should be used less when: - greater judgement is involved in planning & performing relevant audit procedures and evaluating the evidence gathered - risk of material misstatement is high for the specific assertion level risk - objectivity of internal audit function is less supported by org status and policies and procedures - internal audit function is less competent

Answer 55

CAS 600 Typically group = parent company + several subsidiary companies Practitioner must obtain sufficient understanding of the group, including all components and their environments, to then identify all components that are likely significant Significance of component is based on: - financial significance to the group - specific nature or circumstance3s Component auditor may need to be engaged if significant components are in various locations. But component auditor is not supposed to be referred to in report on group FS. Therefor group audit engagement team is responsible for the audit as a whole. Component auditor would have to be evaluated.

Answer 56

CAS 620 - practitioner must evaluate if auditor's expert has necessary competence, capabilities & objectivity - practitioner must obtain sufficient understanding of the field of expertise to enable auditor to: 1. determine nature, scope & objectives of the expert's work 2. evaluate the adequacy of that work for the auditor's purposes Agreement with Auditor's expert paragraph 11 evaluating adequacy of auditor's expert work: - relevance & reasonableness of expert's findings or conclusions & their consistency with other audit evidence - if significant assumptions & methods: relevance & reasonableness of those assumptions & methods - if source data is used: relevance, completeness & accuracy of source data

Answer 57

Inadequate corporate governance Lack of "tone at the top" Inadequate internal control Large financial incentives Complex business operations High expectations

Answer 58

- Pressure/Incentives - Rationalization/attitude - Opportunity Usually more than one of the above elements is needed for fraud to occur, but only one needs to be present for their to be fraud risk in audit.

Answer 59

CAS 240 Auditor objectives: - identify & assess risks of material misstatement of the FS due to fraud - obtain sufficient appropriate audit evidence regarding the assessment of risks of material misstatement due to fraud through designing and implementing appropriate responses - respond appropriately to fraud or suspected fraud identified during audit Audit must have attitude of prof. skepticism at all times.

Answer 60

CAS 240 paragraphs 17 to 25 - inquiry with mgmt regarding their identification, communication & response to fraud risks - inquiry with mgmt & those charges with governance regarding actual, suspected or alleged fraud in company - inquiry with those charged with governance as to how they exercise oversight of mgmt to identify and assess fraud risk - look for unusual or unexpected relationships obtained from analytical procedures - consider the risk of mgmt bias and override

Answer 61

- perform procedures to identify the risk of material misstatement due to fraud - assess the risk of material misstatement due to fraud at the FS and assertion level - determine audit responses to address risk of material misstatement - Evaluate audit evidence to consider whether an identified misstatement may indicate fraud has occurred - obtain written representations from mgmt in relation to fraud - communicate with mgmt, those charged with governance & regulatory authorities Above points are each their own section in CAS 240