tailieunhanh - Lecture Auditing & assurance services (5th) - Chapter 6: Employee fraud and the audit of cash

After reading the material in this chapter, you should be able to: Define and explain the differences among several kinds of employee fraud that might occur at an audit client, identify and explain the three conditions (., the fraud triangle) that often exist when a fraud occurs, describe techniques that can be used to prevent employee fraud. | McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 06 Employee Fraud and the Audit of Cash "Rather fail with honor than succeed by fraud." --Sophocles (496-406 BC) 6- Learning Objectives Define and explain the differences among several kinds of employee fraud that might occur at an audit client. Identify and explain the three conditions (., the fraud triangle) that often exist when a fraud occurs. Describe techniques that can be used to prevent employee fraud. Describe the control activities over the receipt and disbursement of cash. Describe the types of substantive procedures that are conducted during the audit of cash. Discuss actual cash fraud cases and describe how the schemes were uncovered. Describe some extended procedures for detecting employee fraud schemes involving cash. 6- Employee Fraud Overview Fraud consists of knowingly making material misrepresentations of fact with the intent of inducing someone to believe the falsehood and act upon it and thus, suffer a loss or damage. Employee fraud is the use of fraudulent means to take money or other property from an employer. It consists of three phases: (1) the fraudulent act, (2) the conversion of the money or property to the fraudster's use and (3) the cover-up. Embezzlement is a type of fraud involving employees' or nonemployees' wrongfully taking money or property entrusted to their care, custody, and control, often accompanied by false accounting entries and other forms of lying and cover-up. Errors are unintentional misstatements or omissions of amounts or disclosures in financial statements. Direct-effect Illegal Acts are violations or government regulations by the company, or its management or employees that produce direct and material effects on dollar amounts in the financial statements. 6- The Fraud Triangle There are three conditions that are likely to be present when a fraud occurs. They are: Motivation Opportunity . | McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 06 Employee Fraud and the Audit of Cash "Rather fail with honor than succeed by fraud." --Sophocles (496-406 BC) 6- Learning Objectives Define and explain the differences among several kinds of employee fraud that might occur at an audit client. Identify and explain the three conditions (., the fraud triangle) that often exist when a fraud occurs. Describe techniques that can be used to prevent employee fraud. Describe the control activities over the receipt and disbursement of cash. Describe the types of substantive procedures that are conducted during the audit of cash. Discuss actual cash fraud cases and describe how the schemes were uncovered. Describe some extended procedures for detecting employee fraud schemes involving cash. 6- Employee Fraud Overview Fraud consists of knowingly making material misrepresentations of fact with the intent of inducing someone to .