Auditors Must Consider the Possibility of Fraud by Employees or Management

question 42

Essay

Auditors must consider the possibility of fraud by employees or management on every audit engagement.They must also consider the possibility that the client has not complied with laws.
(a)Distinguish between employee and management fraud.
(b)Describe the auditors' responsibility for the detection of fraud in an audit.
(c)Describe the auditors' responsibility regarding noncompliance with laws by a client.

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Definitions:

Sympathetic Division

Part of the autonomic nervous system that prepares the body for quick action in emergencies; "fight or flight" response.

Parasympathetic Division

Part of the autonomic nervous system responsible for conserving energy and bringing the body to a state of rest by slowing the heart rate, increasing intestinal and glandular activity, and relaxing sphincter muscles.

Central Nervous System

The part of the nervous system consisting of the brain and spinal cord, which interprets sensory information and issues instructions based on past experience and current conditions.

Peripheral Nervous System

The peripheral nervous system is the part of the nervous system that consists of the nerves and ganglia outside of the brain and spinal cord, which connect the central nervous system to limbs and organs.