BUS 426 Chapter Notes - Chapter 5: Engagement Letter, Internal Control, Financial Statement

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sapphiresnake846

19 Sep 2012

School

Simon Fraser University

Department

Business Administration

Course

BUS 426

Professor

Michael Favere- Marchesi

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Document Summary

Maintain adequate internal control conduct the audit using a risk- Provide documentation and information for the audit process based approach. Conduct the audit to provide reasonable assurance about material misstatements. Issue a management letter if weaknesses are encountered that could result in a material error. Professional skepticism: the auditor should not assume that the management is dishonest, but the possibility of dishonesty must be considered. Error: an unintentional misstatement of the financial statements. Defalcation, employee fraud: theft of assets: management fraud is for the company, whereas. Computer fraud: fraud conducted with the assistance of computer software or hardware. Direct-effect illegal acts: illegal acts that directly impact the financial statement, such as a violation of income tax law. Auditor has a responsibility to find these acts. Indirect-effect illegal acts: illegal acts that indirectly impact the financial statement, such as violating the environmental laws, which only when found, will be imposed a fine affecting the financial statement.

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BUS 426 Chapter Notes - Chapter 5: Engagement Letter, Internal Control, Financial Statement

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