SAS No. 122, AU 240, Consideration of Fraud in a Financial Statement Audit

When performing a financial statement audit, auditors have always been responsible for the detection of anything that would cause a material misstatement of the financial statements whether caused by error of fraud.  However, in the past the audit profession focused on material misstatements due to errors and more or less ignored the possibility of misstatements due to fraud.  Now, SAS No. 122, AU 240 requires significant documentation as to what the auditor did in order to determine if there any material risk of a misstatement of the financial statements.  This presentation is an overview of what the auditor is to document in there working papers on every financial audit as to the procedures they performed in order to determine the risk of a material misstatement.  If a material risk is discovered, they are then required to document what they did in order to determine if the financial statements were misstated.

• Delivery Format: Live Webcast Replay

• Understand the concept of materiality, both quantitively and qualitatively
• Develop and maintain professional skepticism throughout the audit
• Examine supporting documentation with a questioning attitude
• Discuss the danger of making assumptions
• Assess the risk of familiarity related to anticipation when dealing with a repeat client
• Relate what is real vs perception

• The importance of professional skepticism
• The dangers of making assumptions
• How to listen and understanding the answer to a question
• Why it is important to leave all of your expectations at home
• Anticipation and why it’s so dangerous
• Determining materiality
• The fraud triangle
• Thinking about, given a set of circumstances, how you would steal
• Management and the Tone At the Top