Chapter 5

Fraud refers to an intentional act by one or more individuals among management, those charged with governance, employees, or third parties, involving the use of deception to obtain an unjust or illegal advantage

• True

• False

Intentional misstatements

• Misstatements resulting from fraudulent financial reporting (xuyên tạc thông tin)

• Misstatements resulting from misappropriation of assets (biển thủ tài sản)

• Both of two answers

The error refers to unintentional mistakes in FSs which results in a misrepresentation of FSs.

• True

• False

Factors affect fraud and error

• The doubt concerning management's integrity. (nghi ngờ tính chính trực của nhà quản lý)

• Unusual pressures within or on an entity. (sức ép, thất thường)

• Unusual transactions and events. (giao dịch bất thường)

• Difficulties in obtaining sufficient appropriate audit evidence. (khó khăn trong việc thu thập các bằng chứng đầy đủ)

• Factors unique to computer information system environment relating to the above conditions and events

Auditor’s responsibility for fraud and error

• The auditor and the audit firm are not and cannot be held responsible for the prevention of fraud and error in the client entity.

• Through an audit, the auditor and the audit firm have responsibility for the detection and assessment of their effects on the financial statements.

• Besides, the auditor and the audit firm have responsibility for reporting (announce) of fraud and error.

• All of the above answers

Nature of materiality in an audit

• Materiality is a term that denotes the importance of information of disclosure in the FSs.

• Information to be material if omitted or misstated could influence decisions that users make on the basis of the financial information

• Setting up an appropriate materiality level is to help the auditor determine the nature, timing, and extent of audit procedures.

• Auditors must view and determine the material level in 3 phases of the FSs audit, from planning the audit to evaluating the results of audit testing when formulating the audit opinion

• All of the above answers

Materiality (trọng yếu): An expression of the relative significance or importance of a particular matter in the context of financial statements as a whole

• True

• False

Performance materiality (mức trọng yếu thực hiện): The amount or amounts set by the

auditor at less than materiality for the financial statements as a whole to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality for the financial statements as a whole

• True

• False

Tolerable misstatement (sai sót có thể chấp nhận được): is the maximum misstatement that an auditor is prepared to accept in a class of transactions or balances in the financial statements.

• True

• False

Used criteria to calculate materiality level

ISA 320

Materiality in planning and performing an audit

• Planing Materiality:

  5% - 10%Profit before tax

  0.5%-1% Revenue

  1%-2% Total asset

• Performance Materiality

  PM<M