I’m studying for my Accounting class and don’t understand how to answer this. Can you help me study?
1. What are the objectives of audit risk assessment, and why is it important to assess the likelihood that fraud may occur? How might the assessment influence the auditors’ evaluation of ICFR?
3. AU-C 240 points to three conditions that enable fraud to occur. Briefly describe each condition. How does one’s propensity to act ethically, as described by Rest’s model of morality, influence each of the three elements of the Fraud Triangle?
9. Rationalization for fraud can fall under two categories: “no harm” and “no responsibility.” Assume an employee is directed by management to reduce recorded expenses at year-end by insignificant amounts individually, but which are material in total. How might the employee justify her actions if questioned by the auditor with respect to no harm and no responsibility? What stage of moral development in Kohlberg’s model is best illustrated by the employee’s actions? Why?
16. Discuss the link between skeptical judgment and skeptical action and Rest’s Four-Component Model of Ethical Decision Making.
17. What are the auditor’s responsibilities to communicate information to the audit committee under PCAOB standards? If the auditor discovers that the audit committee routinely ignores such communications, especially when they are critical of management’s use of GAAP in the financial statements, what step(s) might the auditor take at this point?
**** Book used….. Mintz, Steven; Mintz, Steven. Ethical Obligations and Decision-Making in Accounting: Text and Cases (Page 316). McGraw-Hill Higher Education. Kindle Edition.