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Definiton Types Internal External Fraud

Cathy Huang

on 4 February 2013

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Transcript of Audit

Definition of Audit The general definition of an audit is an evaluation of a person, organization, system, process, enterprise, project or product. The term most commonly refers to audits in accounting. -Wikipedia Agenda Definition and Types of Audit Audit Prepared by Types of Audit Internal Audit Key Principles of Internal Audit Approaches towards Internal audit: Benefits of Internal Audit Identify problem and plan for actions Selena Nadia Saif Cathy Internal Audit External Audit Fraud Considerations Summary Q & A External Audit independent objective consulting to evaluate and improve in accordance with laws or rules independent unbiased to report Independent Evidence based approach All activities related to IA should: Be reviewed by an independent party Be a self appraisal system Be open constructive and effective Achieve better allocation of resources Able to avoid potentially big problem Continuous improvement Internal Audit Report Various formats Name, location, date, plan and observations Classifications of non compliances Recommendations or expections Should write against a standard Focus on deficient conditions and not people Internal Audit Report - Continued Roadmap of External Audit Planning and Risk Identification Strategy and Risk Assessment Execution Conclusion and Reporting Planning and Risk Identification Understand Business Determine the need for specialized skills Identify significant Accounts Understand Managements Assessment Process Strategy and Risk Assessment Perform Walkthrough Make Combined Risk Assessment Designs test of controls Design substantive procedures Prepare audit strategies EXECUTION Execute test of controls Execute test of journal entries Perform substantive procedures Conclusion and Reporting Prepare summary of audit differences and control deficiencies Prepare the summary review memorandum Prepare and deliver client communications Complete documentation and archive engagement Approach to Identify Fraud Step1 Obtain Information Inquiries of management and those charged with governance Inquiries of Internal Audit Inquiries of others within the entity Other risk assessment procedures Step2 Evaluate Conditions in Fraud Triangle Factors Fraud Risk Incentive /Pressure Opportunity Attitude/
Rationalization Step3 Determine Responses Due to Fraud Overall response –response that has an overall effect on how our audit is conducted Specific response – response to identified risks of material misstatement due to fraud involving the nature, timing and extent of specific audit procedures to be performed Fraud Considerations What is Fraud? A fraud is an intentional deception made for personal gain or to damage another individual Fraud Example The cashier colluded with bank worker to make fake bank statement, because the cashier had embezzled money of the company to invest in stock market and made a big loss. Incentive: Earn money in stock market by using company's money Opportunity: Bank worker would like to help her Attitude: Know the falsity and intentionally conduct the crime
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