Fraud Risk Management and Assessment

Fraud Risk Management and Assessment

Please read and analyze the case study (Urgent Medical Device, Inc.: A Teaching Case Designed to Integrate Data and Analytics in the Financial Statement Auditing Classroom) and complete Question 1 and 3 below.

Fraud Risk Management and Assessment Requirements

 

1) According to the professional auditing standards, an audit team should ordinarily presume

that revenue recognition is a fraud risk. Complete the following steps.

  1. Based on your understanding of fraud risk assessment and the case information,

identify at least three specific fraud risk factors related to Urgent. Classify these

risks in terms of What Can Go Wrong (WCGW) with each of the significant

accounts and relevant assertions identified for Urgent’s revenue and accounts

receivable cycle.

  1. What do you believe is the most significant risk related to the revenue account for

Urgent?

  1. What special audit considerations would you propose in response to the significant

risk you identified above? In your response, consider how you would change your

approach to the nature, timing and extent of evidence in response to the identified

risk.

 

 

3) Data visualization tools such as Tableau can be used to help audit teams identify items or

specific areas of higher risk within an entire population. Your data and analytics center

has provided you with a set of Tableau visualizations to consider during your substantive

testing procedures:

 

  1. 3-way match of SalesOrderID, InvoiceID, and ShipID based solely on

SalesOrders database

  1. Sales by territory

iii. Sales by distributor

  1. Sales by quarter
  2. Sales by territory by quarter
  3. Product sales by Territory

vii. 4th Quarter Sales by Territory

viii. Sales vs. Sales Goals for 4th quarter by Territory

  1. Sales by quarter by Territory vs 4th Q Sales Goals

 

  1. Using the data visualizations provided in Tableau, compose a memo to be included

in the audit documentation file that identifies any patterns in the data that you

believe may be indicative of specific audit risks. In your memo, be sure to link the

identified risks to the appropriate significant account and relevant assertions.

 

Fraud Risk Management and Assessment Learning Objectives of Case

 

To understand the fraud risks associated with revenue recognition and its impact

on the testing of the revenue and accounts receivable cycle (demonstrated when

students complete requirement 1 of the case).

 

To learn how to interpret commonly used data visualizations and reach audit

conclusions based on the issues, objectives and alternatives that surface given the

observed facts and circumstances (demonstrated when students complete

requirement 3 of the case).

 

To understand how to utilize commonly used data and analytics software tools (i.e.,

IDEA and Tableau) within a realistic audit context (demonstrated when students

complete requirements 3, 4 and 5 of the case).

 

To develop critical thinking skills around the identification of exceptions and risk

factors in client provided data (demonstrated when students complete

requirements 3, 4 and 5 of the case).

Fraud Risk Management and Assessment

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