1. The ACFEs 2018 Global Fraud Study found that only a small percentage of frauds were discovered via external audits, and this is a consistent finding across the many years of the ACFE studies. Why do you think so few frauds are uncovered by external auditors? How are most cases of fraud discovered?
2. What are the auditors responsibilities with respect to detecting and reporting financial statement fraud? Reference the AICPA's AU-C Section 240 and the Security Exchange Act (1934) Section 10A in your answer.
3. How and when does an auditor evaluate the risk of fraud on a client engagement? What do internal controls or the control environment have to do with fraud prevention or detection?