AUDITING AND ASSURENCE CASE STUDY

AUDITING AND ASSURENCE CASE STUDY APPLIANCE CENTRAL PLC



AUDITING AND ASSURENCE CASE STUDY APPLIANCE CENTRAL PLC

Fraud

We can say it is a hoax to a third party, breach of trust, fraud, simulation, etc. The term "fraud" refers to the intentional act of the administration, staff or third parties, resulting in a misrepresentation of the financial statements and may involve (Carpenter, 2007, 1119-1140):

Manipulation, falsification or alteration of records or documents.

Misappropriation of assets

Suppression or omission of the effects of certain transactions from records or documents.

Recording of transactions without substance or backing

Misapplication of policy statements.

Why there Fraud

It is considered that there are scams (Whittington, 2012):

Lack of adequate controls.

Little and poorly trained staff.

Low / high job rotation.

Documentation confusing.

Low wages.

Existence easy conversion of assets: bonds, notes, etc.

Poor legislation.

Activities incompatible.

Auditor's Responsibility

Auditor is a professional who examines carefully in order to determine whether the activities in a particular company or industry comply with planned arrangements and / or established previously, if these were implemented effectively and are suitable to achieve the objectives. The auditor may be external or internal. Currently, the internal auditor function is to oversee the organization's processes, reviewing procedures to determine which most appropriate and productive areas are. Since the external auditor has as main task to analyze and validate the accounts and balance sheet balances. Moreover, distributed in several ramifications: audit systems, audit of human resources, quality auditing, financial statement audit, legal audit, audit accounting.

Principal activities

Prepare and analyze financial statements of companies in different segments

Reviewing internal control procedures

Reporting

Trading on the Stock Exchange

Evaluate the internal control environment

Audit the accounts in order to give an opinion of independent auditors

Accountable entities of direct public

It is very important in the auditing profession, performing the duties with honesty, always in accordance with the laws and interests of customers. In addition, other interesting features are: 

Integrity 

Responsibility 

Reliability 

Be organized 

Be Ethical 

Be flexible 

Be dedicated 

Critical stance 

Ability to handle the stress of traffic 

Discipline 

Commitment 

Honesty 

Fraud Risk Factors

The risk factors that the audit team should consider when conducting the audit of Appliance Central Plc are highlighted below in light of below discussion.

The risk of fraud in the company (fraud risk) is an area that is not yet fully developed. Despite the actions taken by the company, in the field of fraud and corruption continue to hear reports of fraud in organizations. Cases of abuse can happen in any organization.

The Auditing Standards Board (ASB) issued the Statement of Auditing Standard (SAS) 99 known as Consideration of Fraud in a Financial Statement Audit in November 2002. SAS 99 supersedes SAS 82 in response to its inadequacies, which were brought to light after the major accounting scandals including those at Enron, Worldcom, Adelphia and Tyco. It became effective for all financial statement audits on or after December 15, 2002 with the intention of rebuilding the confidence of investors into major public companies and reestablishing audited financial statements as a reliable component of corporate America. Once the standard came into effect, it was important to measure auditors' reactions to the effectiveness of SAS ...