Wiley Practitioner's Guide to GAAS 2020. Joanne M. Flood

Чтение книги онлайн.

СКАЧАТЬ Determine and document whether management’s rationale for the transaction (or lack thereof) suggests that the transaction may have been entered into to engage in fraudulent financial reporting or conceal a misappropriation of assets. In making your determination, consider whether:The form of such transactions is overly complex.Management has discussed the nature of an accounting for such transactions with ABC Co., the audit committee, or board of directors.Management is placing more emphasis on the need for a particular accounting treatment than on the underlying economics of the transaction.Transactions that involve unconsolidated related parties have been properly reviewed and approved by the audit committee or board of directors.The transactions involve previously unidentifiable related parties or parties that do not have the substance or the financial strength to support the transaction without assistance from the entity under the audit CONCLUSION We have performed procedures sufficient to achieve the stated audit objective, and the results of these procedures are adequately presented in the accompanying workpapers. (If you are unable to conclude on the objective, prepare a memo documenting your reason.)

      Notes

      1 1 https://home.kpmg/xx/en/home/insights/2016/05/globalprofiles-of-the-fraudster.html.

      2 2 https:www.sec.gov/litigation/admin/2016/33-10068.pdf.

      3 3 https:www.sec.gov/news/pressrelease/2016-74.html.

      4 4 Fraud that involves senior management or fraud that causes a material misstatement of the financial statements should be reported directly to those charged with governance.

      5 5 Management incentive plans may be contingent upon achieving targets relating only to certain accounts or selected activities of the entity, even though the related accounts or activities may not be material to the entity as a whole.

6 AU-C 250 Consideration of Laws and Regulations in an Audit of Financial Statements

       Scope

       Definition of Term

       Objectives of AU-C Section 250

       Requirements

       Management’s Responsibilities

       Auditor’s Responsibilities

       Categories of Laws and Regulations

       Audit Procedures

       Response to Identified or Suspected Noncompliance with Laws and Regulations

       Evaluation of Detected or Suspected Noncompliance with Laws and Regulations

       Reporting Identified or Suspected Noncompliance

       Documentation

      SCOPE

      AU-C 250 applies to an audit of financial statements. It does not apply to assurance engagements specifically to test and report separately on compliance with specific laws or regulations. (AU-C 250.01)

      DEFINITION OF TERM

      Source: AU-C 250.11. For the definition related to this standard, see Appendix A, “Definitions of Terms”: Noncompliance.

      OBJECTIVES OF AU-C SECTION 250

      AU-C Section 250.10 states that:

      The objectives of the auditor are to

      1 obtain sufficient appropriate audit evidence regarding material amounts and disclosures in the financial statements that are determined by the provisions of those laws and regulations generally recognized to have a direct effect on their determination (see paragraph .06a),

      2 perform specified audit procedures that may identify instances of noncompliance with other laws and regulations that may have a material effect on the financial statements (see paragraph .06b), and

      3 respond appropriately to noncompliance or suspected noncompliance with laws and regulations identified during the audit.

      (AU-C Section 250.10)

REQUIREMENTS

      Management’s Responsibilities

      Management and those charged with governance have the responsibility for the entity’s operations complying with laws and regulations including financial statement reports. (AU-C 250.03) Procedures to aid management in complying with laws and regulations include:

       Monitoring legal requirements

       Ensuring that procedures are designed to meet requirements

       Operating systems of internal controls

       Following a code of conduct

       Employing СКАЧАТЬ