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Explain auditors' responsibilities in detecting fraud

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Explain auditors' responsibilities with respect to detecting and reporting fraud?

Provide a brief overview of the types of reports that accompany an entity's financial statements?

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Explain auditors' responsibilities with respect to detecting and reporting fraud?

Frauds are intentional errors. Here is an outline of the auditor's responsibility to get you started.

DETECTING

1. Auditors are required to discuss the susceptibility of the financial statements to fraud and how the audit will probe those vulnerabilities such as:

- Management's supervision habits
- Unusual changes in lifestyle, attitude, behavior
- Types of circumstances that might signal fraud
- How to introduce some element of unpredictability to the audit
- Procedures that might uncover fraud in areas of vulnerability
- Any allegations of misdeeds, errors, impropriety
- Auditors are required to presume that improper recognition of revenue is a fraud risk

2. Keep an attitude of professional skepticism

o Questioning and critical assessment of evidence
o Believe management only when comments are supported by evidence

3. Look for three conditions ("fraud ...

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