Management fraud (e. g., fraudulent financial reporting) is a relatively rare event. However, when it does occur, the frauds (e. g., Enron and WorldCom) can have a significant effect on shareholders, employees, and other parties. AU 240, Consideration of Fraud in a Financial Statement Audit, provides the relevant guidance for auditors.

Required: a. What is the auditor's responsibility for detecting fraud? b. Describe the three conditions that are generally present when fraud occurs? c. What are the objectives of the " brainstorming" meeting that is held among the engagement team members? d. What is the required documentation for identified risk factors?