Assessing and Responding to Fraud Risks

Chapter 10: Assessing and Responding to Fraud Risks
Assessing the risk of fraud in a financial statement audit is a difficult audit judgment. Auditing standards require the auditor to perform several audit procedures to accumulate information to assess the risk of fraud. You are the in-charge auditor responsible for planning the financial statement audit of Spencer, Inc. Two new staff auditors are assisting you with the initial audit planning and have asked you the questions below. Please summarize your responses to these staff auditor questions:

a. What is the purpose of the audit team’s brainstorming session?

b. Who should attend the brainstorming session and when should the session be held?

c. What is the role of the two staff auditors in the brainstorming session?

d. What is the auditor’s responsibility under auditing standards for detecting fraud?

e. What must the auditor document in the working papers related to the brainstorming session?