Financial Crime - Tutorial 1

Describe auditors

• An individual who is hired by the company and performs internal control for the company

• The person or a firm who has a conflict of interest with a company

• Person works for the company and is involved with checking the company details

• A person or a firm assigned to perform an audit on an organization

1. Please choose the correct objectives of external auditors

1. I. To form an independent opinion on the financial statements of the audited entity. 

   II. to detect misstatement/error

2. III. to provide independent assurance that an organization's risk management, governance, and internal control processes are operating effectively.

3. IV. to detect fraud

• 1. I, II, III

• 1. II, III, IV

• 1. I, III, IV

• 1. I, II, IV

Describe professional skepticism

• The expression of disapproval of someone or something based on perceived faults or mistakes.

• An attitude that includes a questioning mind and a critical assessment of audit evidence

• Condition in which people have an unreasonably high sense of their importance

• The practice of an activity, especially a sport, is done by professional rather than amateur players.

The statement, suggests the failure that may be committed by the auditors that allowed Mr Ali to perform fraud without being caught.

1. I. An Auditor can commit fraud by knowingly issuing a more favorable audit report 

2. II. The Auditor can be unduly influenced by having a direct or indirect financial interest in the client

3. III. The auditor can be unreasonably influenced because of having some personal relationship with the client beyond what is expected in a normal audit between independent parties

4. IV. An auditors perform auditing tasks following the standard operating procedure

• 1. I, II, III

• 1. I, II, IV

• 1. II, III, IV

• 1. I, III, IV

The figure shows the COSO Framework. Analyze the usage of that framework in combating fraud

• Examine issues related to company business practices and risks

• We are designing and implementing systems of internal control and assessing the effectiveness of internal control.

• Examine the financial records and issue an opinion regarding the financial statements of the company

• Form an independent opinion on the financial statements of the audited entity.