tailieunhanh - Ebook Ethical obligations and decision making in accounting (4th edition): Part 2

(BQ) Part 2 book "Ethical obligations and decision making in accounting" has contents: Fraud in financial statements and auditor responsibilities; legal, regulatory, and professional obligations of auditors; earnings management; ethical leadership and decision making in accounting. | Find more at Chapter 5 Fraud in Financial Statements and Auditor Responsibilities Learning Objectives After studying Chapter 5, you should be able to: LO 5-1 LO 5-2 LO 5-3 LO 5-4 LO 5-5 LO 5-6 LO 5-7 Distinguish between audit requirements for errors, fraud, and illegal acts. Explain the components of the Fraud Triangle. Describe fraud risk assessment procedures. Explain the standards for audit reports. Discuss the characteristics of professional skepticism. Explain PCAOB auditing standards. Describe the PCAOB inspection process. 269 Find more at 270 Chapter 5 Fraud in Financial Statements and Auditor Responsibilities Ethics Reflection A disconnect sometimes exists between a CPA’s professional responsibility for detecting fraud and the public’s perception of a CPA’s duties in this regard. The “expectations gap” is one of understanding the actual role and responsibility of the external auditor with respect to detecting financial reporting fraud, and the public’s perception with respect to the auditor’s role therein. In an attempt to close the gap, the AICPA recently revised its audit reports to provide more information in the report and clarify its purpose for the investing public. Audits are designed to look for fraud, using the “Fraud Triangle,” and detecting material misstatements in the financial statements due to error and fraud. Unfortunately, the reality is, according to the 2014 Global Fraud Study published by the Association of Certified Fraud Examiners (ACFE),1 external audits are among the least effective controls in combating fraud, with only 3 percent of the fraud cases detected in this way. Perhaps more troubling is the median financial statement fraud lasts 24 months. A lot of damage can be done in that time period. Financial statement fraud undermines the reliability, quality, transparency, and integrity of the financial reporting process and jeopardizes the integrity and objectivity of auditors .