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11-34 (Objectives 11-2, 11-3) In Parts I (pp.245247) and II (pp. 287288) of this case you performed preliminary analytical procedures and assessed acceptable audit risk

11-34 (Objectives 11-2, 11-3) In Parts I (pp.245247) and II (pp. 287288) of this case you performed preliminary analytical procedures and assessed acceptable audit risk and inherent risk for Pinnacle Manufacturing. In Part III (pp. 332333) of the case, you obtained an understanding of internal control and assessed control risk for acquisition and cash disbursement transactions. The auditor also assesses fraud risk as part of risk assessment procedures performed during audit planning. You have been invited by the audit partner on the Pinnacle engagement to participate in the fraud brainstorming session conducted as part of audit planning. The purpose of Part IV is to identify fraud risks and the response to these fraud risks in the audit of Pinnacle Manufacturing. Required a. Use the fraud triangle and information from Parts I through III of this case to identify incentives/pressures, opportunities, and attitudes/rationalizations for Pinnacle to engage in fraudulent financial reporting. b. Identify one or more fraud risks that you believe exist due to the nature of Pinnacles industry. Indicate the accounts most likely to be affected by the identified fraud risks.

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