ACCT # 6650 Forensic Advance Audit Topics
February 10, 2013
The detection of fraud is depending on what type of fraud and the internal controls that are in place. Rancher, Riley and Wells (2011) reported “Statement on Auditing Standards (SAS) No.99 “Consideration of Fraud in a Financial Statement Audit” defines two types of misstatements relevant to an audit of financial statement and subject to auditor’s consideration of fraud” (p.420) the two types are asset misappropriation fraud and financial statement fraud. Barrett (2011) reported “asset misappropriation fraud involves third parties or employees in an organization who fraudulently abuse their position to steal from the company’s coffers” (p.1). Kranacher, Riley, and Wells(2011) defined “financial statement fraud used of deliberate misstatements or omissions of amounts or disclosures of financial statement that deceive financial statement misstatement or omissions of the amount or disclosed deceive financial statement to investors or creditors “(p.419). This paper will analyze two specific types of asset misappropriations fraud and two specific types of financial statement fraud. This paper will also analyze the procedures for investigating each of the four types of fraud and how internal controls are used to prevent and detect these types of fraud. Asset Misappropriations
The asset misappropriations fraud can be committed by any persons within the company that manage the assets and interests of an organization (Barrett, 2011). There are several types of asset misappropriations, which are the following: check forgery, theft of money, inventory theft, payroll fraud and etc. Two most common types of asset misappropriation are payroll fraud and cash larceny.
Kranacher, Riley and...