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1 . In planning the audit, an auditor takes three basic steps in determining the audit procedures to be performed for any business cycle or

1. In planning the audit, an auditor takes three basic steps in determining the audit
procedures to be performed for any business cycle or class of transactions to gather
audit evidence concerning possible misstatement due to error or fraud. List those
three basic steps below.
2. The auditor gather information from various sources to assess fraud risks. Given
the following sources, discuss what information would be gathered and how those
information would assist the auditor in his (her) auditing for fraud.
a. Communications among audit team members.
b. Inquiries of management.
c. Risk factors.
d. Analytical procedures.
e. Other procedures.
3. The "tone at the top" provides a foundation upon which a more detailed code of
conduct can be developed to provide specific guidance for the organization and its
employees.
Components of a code of conduct may include sections on
1) general employee conduct,
2) relationships with clients and suppliers, and
3) conflicts of interest.
Give a narrative description of what might be included in each of the above
components of a code of conduct.
4. List the three main types of revenue manipulations employed to commit fraudulent
financial reporting and give an example for each type.
5. The most common fraud in the acquisition and payment cycle is for the perpetrator
to issue payments to fictitious vendors and deposit the cash in fictitious accounts.
What procedures could the company take to prevent this type of fraud?

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