Fraud Risk Questions During an Audit

As part of an audit, auditors are required to consider the risk of material misstatement of the financial statements due to fraud. As a result, even when auditors do not suspect fraud, they will be asking questions designed to assess the risk of fraud, in compliance with auditing standards. Fraud risks can be considered in the following context:

  • Are employees or management under pressure or do they have an incentive to commit fraud?
  • Does the opportunity to commit fraud exist?
  • Do employees or management have an attitude that allows them to rationalize committing fraud?

Date this Avoiding Pitfall was most recently published: 3/19/2021