ACC 5400 Lecture Notes - Lecture 26: Financial Statement

• School: Baruch College
• Department: Accountancy
• Course: ACC 5400
• Professor: thomas ray

Document Summary

Inquiries: whether management or internal auditors have knowledge of fraud or suspected fraud, management"s process for assessing fraud risks and controls that address those risks. Information reported to the audit committee: the audit committee"s views about the risk of fraud and whether they are aware of any, others within the organization. Financial stability or profitability is threatened by economic, industry, or entity operating conditions. Excessive pressure exists on management due to possible inability to meet debt covenants. Personal net worth of executives is materially threatened because of investments in entity. There are significant accounting estimates that are difficult to verify. Significant related party transactions not in the ordinary course of business. Inappropriate or inefficient communication and support of the entity"s values is evident. A history of violations of laws is known. Recurring attempts by management to justify marginal or inappropriate accounting on the basis of materiality. Personal financial obligations create pressure to misappropriate assets.