(please type the answers)( Case 29 Consideration of Fraud in a Financial Statement Audit) (Accounting 5520)

1. Describe Nixons actions in terms of the fraud triangle.

2. Discuss the requirements of AU Section 316, Consideration of Fraud in a Financial Statement Audit. Discuss the role of the auditor in the case of Insignia, Inc. under AU Section 316.

3. A lot of the fraudulent transactions were run through the Loan Related Party account. What audit procedures under AU Section 334 should have been performed in evaluating related party transactions? In your opinion, should the external auditors have discovered the fraud through the Loan Related Party account?

4. One reason that the Insignia fraud could occur was due to nearly non-existent internal controls. SOX was passed in 2003, and companies were required to be in compliance for fiscal year 2005, which is when the Insignia fraud ended. What constitutes an effective system of internal control as it relates to the requirements of Section 404? Who is responsible for establish-ing internal controls?