Ask Yourself the Right Questions before Embarking on an Audit

Fraudulent financial reporting is devastating to a company's fortunes. The Committee of Sponsoring Organizations of the Treadway Commission supported study, Fraudulent Financial Reporting: 1998-2007, found that companies linked to accounting frauds experienced much higher occurrences of bankrup...

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Bibliographic Details
Published inPennsylvania CPA Journal Vol. 84; no. 1; p. 18
Main Authors Boyle, Douglas M, Boyle, James F, Mahoney, Daniel
Format Trade Publication Article
LanguageEnglish
Published Philadelphia Pennsylvania Institute of Certified Public Accountants 01.04.2013
Subjects
Accounting firms
Audit committees
Audit departments
Auditors
Audits
Brainstorming
Compensation
CPAs
Executives
Financial reporting
Financial statements
Fraud
Skepticism
United States > US
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Summary:Fraudulent financial reporting is devastating to a company's fortunes. The Committee of Sponsoring Organizations of the Treadway Commission supported study, Fraudulent Financial Reporting: 1998-2007, found that companies linked to accounting frauds experienced much higher occurrences of bankruptcy, involuntary delisting, and material asset sales than those companies not tainted by fraud. Given the existential risk to external auditors, this article offers tips to consider during audit brainstorming activities to better detect accounting fraud. The application of due professional skepticism is an important factor in detecting accounting fraud. Evaluating questions a CPA may find it prudent to consider during audit planning brainstorming session will help an audit team appropriately assess fraud risk factors so audit procedure modifications can be made. In addition, the audit firm must be certain to assign staff with appropriate levels of experience, training, and professional skepticism.
ISSN:0746-1062