Ac 465 Unit 5

Unit 5 detection and investigation

Eugene Hammond

Kaplan University

AC-465: Advanced Forensic Accounting

Because management is in a unique position to override internal controls and collude with other top managers or outside third parties to work around the traditional control environment, auditors and anti-fraud professionals must design specific procedures to determine whether the system of internal controls that is otherwise operating effectively may be circumvented by a senior manager or group of managers.

Unit 5 Assignment

Part 1 and Part 2 Instructions PDF

Part 1: Textbook: Complete and submit the following questions for grading:

7-2

Generally, how is the problem of management override and collusion addressed?

Since managements has the ability to override internal controls and collude with other executives within the corporation. With this said the forensic accountant and other auditors have to determine if the internal control system is working. These personal have to use methods that are outside the box in order to ensure the internal controls are not being circumvented by high ranking officials of the company.

7-3

What is the “expectations gap”?

The expectations gap is defined in our text as “The difference between the public’s perception of the role of the auditor and the role that audit professionals actually serve has led to an “expectations gap.”

I think this is due to the lack of educations in auditing by the everyday investor. The average person has no idea what it would cost to have auditors provide “absolute assurance” but I also think the person investing in a company should get more than “reasonable assurance” when it comes to the financial statements.

7-5

How is materiality determined?

This is based on the audits discretion, there is no quantitative amount according to our text, and if there was a quantitative amount set for these materiality’s it might increase the chances of fraud.

7-9

* What are the...