Fraud Risk Involving Improper Revenue Recognition

Go to PCAOB AS 2110: Identifying and Assessing Risks of Material Misstatement (PCAOB, 2017b) https://pcaobus.org/Standards/Auditing/Pages/AS2110.aspx

Part 1.0.8 points. At a minimum find the paragraph in PCAOB (2017b)stating that the auditor should presume that there is a fraud risk involving improper revenue recognition. Indicate the paragraph number and copy and paste the paragraph.

Part 2.0.2 points (basically optional if you want to do further research). Skim through Staff Audit Practice Alerts 12 and 15 (PCAOB 2014, 2017a). Also, look through the attached PowerPoints on revenue recognition from Intermediate Accounting, which reflects the new revenue recognition standards (FASB, 2014).

Can you give an example of an improper revenue recognition practice?

In answering your questions, it would be nice if you cite Staff Audit Practice Alerts 12 and 15 and/or other authoritative sources.

Please practice giving proper references.

Another benefit of doing this part of the assignment, even though it is not a lot of points, is that it will provide practice and ideas for your paper.

References:

Financial Accounting Standards Board (FASB, 2014). Accounting Standards Update No. 2014-09 (May 2014), Revenue from Contracts with Customers(Topic 606) http://www.fasb.org/jsp/FASB/Document_C/DocumentPage?cid=1176164076069&acceptedDisclaimer=true

Public Company Accounting Oversight Board (PCAOB, 2014). Staff Audit Practice Alert No. 12 Matters Related to Auditing Revenue in an Audit of Financial Statements, September 9, 2014. https://pcaobus.org/Standards/QandA/9-9-14_SAPA_12.pdf

Public Company Accounting Oversight Board (PCAOB, 2017a). Staff Audit Practice Alert No. 15 Matters Related to Auditing Revenue from Contracts with Customers, October 5, 2017

Public Company Accounting Oversight Board (PCAOB, 2017b). Auditing Standards of the Public Company Accounting Oversight Board, as of December 15, 2017.https://pcaobus.org/Standards/Auditing/Documents/PCAOB_Auditing_Standards_as_of_December_15_2017.pdf