thens INTEGRATED CASE APPLICATION- PINNACLE MANUFACTURING: PART III 333 10-36 (OBJECTIVES 10-2, 10-3) In Parts 1 (pp. 257-259) and II (pp. 294-296) of this case, you performed preliminary analytical procedures and assessed acceptable audit risk and inherent risk for Pinnacle Manufacturing Chapter 107 ASSESSING AND RESPONDING TO FRAUD RISKS ment to participate in the fraud brainstorming session conducted as part during audit planning. You have been invited by the audit partner on the Pin The auditor also assesses fraud risk as part of risk assessment procedure ning. The purpose of Part III is to identify fraud risks and the response to the in the audit of Pinnacle Manufacturing. Required engage in fraudulent financial reporting. a. Use the fraud triangle and information from Parts I and II of this case to for incentives/pressures, opportunities, and attitudes/rationalizations b. Identify one or more fraud risks that you believe exist due to the nature of Pa c. Auditors must generally identify a fraud risk for revenue recognition. Indicate al industry. Indicate the accounts most likely to be affected by the identified Trade cific nature of the potential fraud and an audit procedure that you would perform two ways that Pinnacle might engage in revenue recognition fraud. Identify the determine whether fraud is occurring. financial statements. Identify changes in account balances or ratios that e. Part II of the case includes 11 situations that you encountered in audit planning to indicate the potential for fraud, and describe the nature of the potential fraud. each situation, describe whether it indicates a potential fraud risk. For each potential fraud risk, identify the related fraud risk triangle element(s). d. In Part 1 of this case you performed preliminary analytical procedures on Pinnad you be thens INTEGRATED CASE APPLICATION- PINNACLE MANUFACTURING: PART III 333 10-36 (OBJECTIVES 10-2, 10-3) In Parts 1 (pp. 257-259) and II (pp. 294-296) of this case, you performed preliminary analytical procedures and assessed acceptable audit risk and inherent risk for Pinnacle Manufacturing Chapter 107 ASSESSING AND RESPONDING TO FRAUD RISKS ment to participate in the fraud brainstorming session conducted as part during audit planning. You have been invited by the audit partner on the Pin The auditor also assesses fraud risk as part of risk assessment procedure ning. The purpose of Part III is to identify fraud risks and the response to the in the audit of Pinnacle Manufacturing. Required engage in fraudulent financial reporting. a. Use the fraud triangle and information from Parts I and II of this case to for incentives/pressures, opportunities, and attitudes/rationalizations b. Identify one or more fraud risks that you believe exist due to the nature of Pa c. Auditors must generally identify a fraud risk for revenue recognition. Indicate al industry. Indicate the accounts most likely to be affected by the identified Trade cific nature of the potential fraud and an audit procedure that you would perform two ways that Pinnacle might engage in revenue recognition fraud. Identify the determine whether fraud is occurring. financial statements. Identify changes in account balances or ratios that e. Part II of the case includes 11 situations that you encountered in audit planning to indicate the potential for fraud, and describe the nature of the potential fraud. each situation, describe whether it indicates a potential fraud risk. For each potential fraud risk, identify the related fraud risk triangle element(s). d. In Part 1 of this case you performed preliminary analytical procedures on Pinnad you be
