$1.$ 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?